Correlation Between Steven Madden and Catheter Precision

Can any of the company-specific risk be diversified away by investing in both Steven Madden and Catheter Precision 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 Catheter Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steven Madden and Catheter Precision, you can compare the effects of market volatilities on Steven Madden and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Catheter Precision.

Diversification Opportunities for Steven Madden and Catheter Precision

0.26

Correlation Coefficient

Steven Madden  Catheter Precision

Modest diversification

The 3 months correlation between Steven and Catheter is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Steven Madden i.e., Steven Madden and Catheter Precision go up and down completely randomly.

Pair Corralation between Steven Madden and Catheter Precision

Given the investment horizon of 90 days Steven Madden is expected to generate 0.2 times more return on investment than Catheter Precision. However, Steven Madden is 5.11 times less risky than Catheter Precision. It trades about -0.11 of its potential returns per unit of risk. Catheter Precision is currently generating about -0.12 per unit of risk. If you would invest  4,541  in Steven Madden on October 22, 2024 and sell it today you would lose (429.00) from holding Steven Madden or give up 9.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Steven Madden  vs.  Catheter Precision

Steven Madden

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Catheter Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catheter Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Steven Madden and Catheter Precision

The main advantage of trading using opposite Steven Madden and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Catheter Precision 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 Catheter Precision will offset losses from the drop in Catheter Precision's long position.

The idea behind Steven Madden and Catheter Precision 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.