Correlation Between Steven Madden and Delek Drilling

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

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

Diversification Opportunities for Steven Madden and Delek Drilling

0.01

Correlation Coefficient

Steven Madden  Delek Drilling

Significant diversification

The 3 months correlation between Steven and Delek is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling 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 Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Steven Madden i.e., Steven Madden and Delek Drilling go up and down completely randomly.

Pair Corralation between Steven Madden and Delek Drilling

Given the investment horizon of 90 days Steven Madden is expected to generate 1.47 times more return on investment than Delek Drilling. However, Steven Madden is 1.47 times more volatile than Delek Drilling . It trades about 0.18 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.18 per unit of risk. If you would invest  3,971  in Steven Madden on February 21, 2024 and sell it today you would earn a total of  213.00  from holding Steven Madden or generate 5.36% return on investment over 90 days.

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

Steven Madden  vs.  Delek Drilling

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 very healthy basic indicators, Steven Madden is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Delek Drilling

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delek Drilling may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Steven Madden and Delek Drilling

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

The idea behind Steven Madden and Delek Drilling 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..