Correlation Between Absolute Convertible and Madison E
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Madison E 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 Absolute Convertible and Madison E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Madison E Bond, you can compare the effects of market volatilities on Absolute Convertible and Madison E 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 Absolute Convertible with a short position of Madison E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Madison E.
Diversification Opportunities for Absolute Convertible and Madison E
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Absolute and Madison is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Madison E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Madison E go up and down completely randomly.
Pair Corralation between Absolute Convertible and Madison E
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.16 times more return on investment than Madison E. However, Absolute Convertible Arbitrage is 6.06 times less risky than Madison E. It trades about 0.54 of its potential returns per unit of risk. Madison E Bond is currently generating about 0.05 per unit of risk. If you would invest 1,070 in Absolute Convertible Arbitrage on September 12, 2024 and sell it today you would earn a total of 81.00 from holding Absolute Convertible Arbitrage or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Madison E Bond
Performance |
| Timeline |
| Absolute Convertible |
| Madison E Bond |
Absolute Convertible and Madison E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Madison E
The main advantage of trading using opposite Absolute Convertible and Madison E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Madison E 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 E will offset losses from the drop in Madison E's long position.| Absolute Convertible vs. Vy Goldman Sachs | Absolute Convertible vs. Invesco Gold Special | Absolute Convertible vs. Short Precious Metals | Absolute Convertible vs. Franklin Gold Precious |
| Madison E vs. Gabelli Convertible And | Madison E vs. Calamos Dynamic Convertible | Madison E vs. Virtus Convertible | Madison E vs. Absolute Convertible Arbitrage |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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