Correlation Between Wolverine World and Steven Madden

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

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

Diversification Opportunities for Wolverine World and Steven Madden

0.72

Correlation Coefficient

Wolverine World  Steven Madden

Poor diversification

The 3 months correlation between Wolverine and Steven is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden and Wolverine World 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 Wolverine World Wide 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 Wolverine World i.e., Wolverine World and Steven Madden go up and down completely randomly.

Pair Corralation between Wolverine World and Steven Madden

Considering the 90-day investment horizon Wolverine World Wide is expected to under-perform the Steven Madden. In addition to that, Wolverine World is 1.21 times more volatile than Steven Madden. It trades about -0.22 of its total potential returns per unit of risk. Steven Madden is currently generating about -0.27 per unit of volatility. If you would invest  4,192  in Steven Madden on December 30, 2024 and sell it today you would lose (1,527) from holding Steven Madden or give up 36.43% of portfolio value over 90 days.

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

Wolverine World Wide  vs.  Steven Madden

Wolverine World Wide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolverine World Wide 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 fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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

Pair Trading with Wolverine World and Steven Madden

The main advantage of trading using opposite Wolverine World and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolverine World 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 Wolverine World Wide 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 CEOs Directory module to screen CEOs from public companies around the world.