Correlation Between Altus Group and Madison Pacific
Can any of the company-specific risk be diversified away by investing in both Altus Group and Madison Pacific 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 Altus Group and Madison Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Group Limited and Madison Pacific Properties, you can compare the effects of market volatilities on Altus Group and Madison Pacific 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 Altus Group with a short position of Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Group and Madison Pacific.
Diversification Opportunities for Altus Group and Madison Pacific
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Altus and Madison is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Altus Group Limited and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop and Altus Group 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 Altus Group Limited are associated (or correlated) with Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of Altus Group i.e., Altus Group and Madison Pacific go up and down completely randomly.
Pair Corralation between Altus Group and Madison Pacific
Assuming the 90 days trading horizon Altus Group is expected to generate 2.64 times less return on investment than Madison Pacific. But when comparing it to its historical volatility, Altus Group Limited is 2.11 times less risky than Madison Pacific. It trades about 0.09 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 353.00 in Madison Pacific Properties on September 24, 2024 and sell it today you would earn a total of 178.00 from holding Madison Pacific Properties or generate 50.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altus Group Limited vs. Madison Pacific Properties
Performance |
| Timeline |
| Altus Group Limited |
| Madison Pacific Prop |
Altus Group and Madison Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altus Group and Madison Pacific
The main advantage of trading using opposite Altus Group and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Group position performs unexpectedly, Madison Pacific 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 Pacific will offset losses from the drop in Madison Pacific's long position.| Altus Group vs. Colliers International Group | Altus Group vs. CCL Industries | Altus Group vs. Ritchie Bros Auctioneers | Altus Group vs. Stantec |
| Madison Pacific vs. Colliers International Group | Madison Pacific vs. Altus Group Limited | Madison Pacific vs. CCL Industries | Madison Pacific vs. Ritchie Bros Auctioneers |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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