Correlation Between Steven Madden and Six Flags

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

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

Diversification Opportunities for Steven Madden and Six Flags

-0.61

Correlation Coefficient

Steven Madden  Six Flags

Excellent diversification

The 3 months correlation between Steven and Six is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment 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 Six Flags. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of Steven Madden i.e., Steven Madden and Six Flags go up and down completely randomly.

Pair Corralation between Steven Madden and Six Flags

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Six Flags. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 1.61 times less risky than Six Flags. The stock trades about -0.35 of its potential returns per unit of risk. The Six Flags Entertainment is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,034  in Six Flags Entertainment on August 18, 2024 and sell it today you would earn a total of  560.00  from holding Six Flags Entertainment or generate 13.88% return on investment over 90 days.

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

Steven Madden  vs.  Six Flags Entertainment

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

Six Flags Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Six Flags is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Steven Madden and Six Flags

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

The idea behind Steven Madden and Six Flags Entertainment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.