Correlation Between Absolute Convertible and Madison Core
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Madison Core 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 Core 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 Core Bond, you can compare the effects of market volatilities on Absolute Convertible and Madison Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Madison Core.
Diversification Opportunities for Absolute Convertible and Madison Core
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absolute and Madison is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Madison Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Core 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Core Bond has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Madison Core go up and down completely randomly.
Pair Corralation between Absolute Convertible and Madison Core
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.17 times more return on investment than Madison Core. However, Absolute Convertible Arbitrage is 6.01 times less risky than Madison Core. It trades about 0.37 of its potential returns per unit of risk. Madison Core Bond is currently generating about 0.04 per unit of risk. If you would invest 1,021 in Absolute Convertible Arbitrage on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Absolute Convertible Arbitrage or generate 12.73% 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 Core Bond
Performance |
| Timeline |
| Absolute Convertible |
| Madison Core Bond |
Absolute Convertible and Madison Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Madison Core
The main advantage of trading using opposite Absolute Convertible and Madison Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Madison Core 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 Core will offset losses from the drop in Madison Core'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 Core vs. Rationalpier 88 Convertible | Madison Core vs. Fidelity Sai Convertible | Madison Core vs. Absolute Convertible Arbitrage | Madison Core vs. Calamos Dynamic Convertible |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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