Correlation Between Applied Finance and Madison Dividend
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Madison Dividend 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 Applied Finance and Madison Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Madison Dividend Income, you can compare the effects of market volatilities on Applied Finance and Madison Dividend 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 Applied Finance with a short position of Madison Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Madison Dividend.
Diversification Opportunities for Applied Finance and Madison Dividend
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and Madison is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Madison Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Dividend Income and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Madison Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Dividend Income has no effect on the direction of Applied Finance i.e., Applied Finance and Madison Dividend go up and down completely randomly.
Pair Corralation between Applied Finance and Madison Dividend
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 2.32 times more return on investment than Madison Dividend. However, Applied Finance is 2.32 times more volatile than Madison Dividend Income. It trades about 0.07 of its potential returns per unit of risk. Madison Dividend Income is currently generating about 0.08 per unit of risk. If you would invest 1,600 in Applied Finance Explorer on August 26, 2024 and sell it today you would earn a total of 778.00 from holding Applied Finance Explorer or generate 48.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Madison Dividend Income
Performance |
| Timeline |
| Applied Finance Explorer |
| Madison Dividend Income |
Applied Finance and Madison Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Madison Dividend
The main advantage of trading using opposite Applied Finance and Madison Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Madison Dividend 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 Madison Dividend will offset losses from the drop in Madison Dividend's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Madison Dividend vs. Madison Investors Fund | Madison Dividend vs. Madison Mid Cap | Madison Dividend vs. Columbia Dividend Income | Madison Dividend vs. Fam Equity Income Fund |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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