Correlation Between Steven Madden and Ziff Davis

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

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

Diversification Opportunities for Steven Madden and Ziff Davis

-0.68

Correlation Coefficient

Steven Madden  Ziff Davis

Excellent diversification

The 3 months correlation between Steven and Ziff is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis 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 Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Steven Madden i.e., Steven Madden and Ziff Davis go up and down completely randomly.

Pair Corralation between Steven Madden and Ziff Davis

Given the investment horizon of 90 days Steven Madden is expected to generate 0.68 times more return on investment than Ziff Davis. However, Steven Madden is 1.47 times less risky than Ziff Davis. It trades about -0.4 of its potential returns per unit of risk. Ziff Davis is currently generating about -0.28 per unit of risk. If you would invest  4,596  in Steven Madden on October 1, 2024 and sell it today you would lose (363.00) from holding Steven Madden or give up 7.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Steven Madden  vs.  Ziff Davis

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ziff Davis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steven Madden and Ziff Davis

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

The idea behind Steven Madden and Ziff Davis 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.