Correlation Between 191216CP3 and Steven Madden

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Can any of the company-specific risk be diversified away by investing in both 191216CP3 and Steven Madden 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 191216CP3 and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KO 4125 25 MAR 40 and Steven Madden, you can compare the effects of market volatilities on 191216CP3 and Steven Madden 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 191216CP3 with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216CP3 and Steven Madden.

Diversification Opportunities for 191216CP3 and Steven Madden

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between 191216CP3 and Steven is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KO 4125 25 MAR 40 and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and 191216CP3 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 KO 4125 25 MAR 40 are associated (or correlated) with Steven Madden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steven Madden has no effect on the direction of 191216CP3 i.e., 191216CP3 and Steven Madden go up and down completely randomly.

Pair Corralation between 191216CP3 and Steven Madden

Assuming the 90 days trading horizon KO 4125 25 MAR 40 is expected to under-perform the Steven Madden. But the bond apears to be less risky and, when comparing its historical volatility, KO 4125 25 MAR 40 is 1.07 times less risky than Steven Madden. The bond trades about -0.02 of its potential returns per unit of risk. The Steven Madden is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,288  in Steven Madden on September 24, 2024 and sell it today you would lose (5.00) from holding Steven Madden or give up 0.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy43.54%
ValuesDaily Returns

KO 4125 25 MAR 40  vs.  Steven Madden

 Performance 
       Timeline  
KO 4125 25 

Risk-Adjusted Performance

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Over the last 90 days KO 4125 25 MAR 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KO 4125 25 MAR 40 investors.
Steven Madden 

Risk-Adjusted Performance

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Weak
 
Strong
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.

191216CP3 and Steven Madden Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 191216CP3 and Steven Madden

The main advantage of trading using opposite 191216CP3 and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216CP3 position performs unexpectedly, Steven Madden 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 Steven Madden will offset losses from the drop in Steven Madden's long position.
The idea behind KO 4125 25 MAR 40 and Steven Madden 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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