Correlation Between 83001AAC6 and Steven Madden

Can any of the company-specific risk be diversified away by investing in both 83001AAC6 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 83001AAC6 and Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Six Flags Entertainment and Steven Madden, you can compare the effects of market volatilities on 83001AAC6 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 83001AAC6 with a short position of Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of 83001AAC6 and Steven Madden.

Diversification Opportunities for 83001AAC6 and Steven Madden

0.26

Correlation Coefficient

83001AAC6  Steven Madden

Modest diversification

The 3 months correlation between 83001AAC6 and Steven is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and 83001AAC6 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 Six Flags Entertainment 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 83001AAC6 i.e., 83001AAC6 and Steven Madden go up and down completely randomly.

Pair Corralation between 83001AAC6 and Steven Madden

Assuming the 90 days trading horizon Six Flags Entertainment is expected to generate 0.12 times more return on investment than Steven Madden. However, Six Flags Entertainment is 8.67 times less risky than Steven Madden. It trades about -0.01 of its potential returns per unit of risk. Steven Madden is currently generating about -0.09 per unit of risk. If you would invest  9,935  in Six Flags Entertainment on September 25, 2024 and sell it today you would lose (11.00) from holding Six Flags Entertainment or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Six Flags Entertainment  vs.  Steven Madden

Six Flags Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 83001AAC6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with 83001AAC6 and Steven Madden

The main advantage of trading using opposite 83001AAC6 and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 83001AAC6 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 Six Flags Entertainment 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.