Correlation Between Steven Madden and Samsonite International

Can any of the company-specific risk be diversified away by investing in both Steven Madden and Samsonite International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steven Madden and Samsonite International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steven Madden and Samsonite International SA, you can compare the effects of market volatilities on Steven Madden and Samsonite International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steven Madden with a short position of Samsonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Samsonite International.

Diversification Opportunities for Steven Madden and Samsonite International

-0.35

Correlation Coefficient

Steven Madden  Samsonite International

Very good diversification

The 3 months correlation between Steven and Samsonite is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Samsonite International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsonite International and Steven Madden is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steven Madden are associated (or correlated) with Samsonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsonite International has no effect on the direction of Steven Madden i.e., Steven Madden and Samsonite International go up and down completely randomly.

Pair Corralation between Steven Madden and Samsonite International

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Samsonite International. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 1.02 times less risky than Samsonite International. The stock trades about -0.23 of its potential returns per unit of risk. The Samsonite International SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Samsonite International SA on November 29, 2024 and sell it today you would lose (12.00) from holding Samsonite International SA or give up 0.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Steven Madden  vs.  Samsonite International SA

Steven Madden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Samsonite International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsonite International SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Samsonite International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steven Madden and Samsonite International

The main advantage of trading using opposite Steven Madden and Samsonite International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Samsonite International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Samsonite International will offset losses from the drop in Samsonite International's long position.

The idea behind Steven Madden and Samsonite International SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.