Correlation Between Steven Madden and MYT Netherlands

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

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

Diversification Opportunities for Steven Madden and MYT Netherlands

-0.54

Correlation Coefficient

Steven Madden  MYT Netherlands

Excellent diversification

The 3 months correlation between Steven and MYT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and MYT Netherlands Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYT Netherlands Parent 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 MYT Netherlands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYT Netherlands Parent has no effect on the direction of Steven Madden i.e., Steven Madden and MYT Netherlands go up and down completely randomly.

Pair Corralation between Steven Madden and MYT Netherlands

Given the investment horizon of 90 days Steven Madden is expected to under-perform the MYT Netherlands. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 3.82 times less risky than MYT Netherlands. The stock trades about -0.08 of its potential returns per unit of risk. The MYT Netherlands Parent is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  339.00  in MYT Netherlands Parent on February 3, 2024 and sell it today you would earn a total of  86.00  from holding MYT Netherlands Parent or generate 25.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Steven Madden  vs.  MYT Netherlands Parent

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 current stock price disarray, may contribute to short-term losses for the investors.

MYT Netherlands Parent

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, MYT Netherlands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steven Madden and MYT Netherlands

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

The idea behind Steven Madden and MYT Netherlands Parent 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.