Correlation Between CCL Industries and Madison Pacific
Can any of the company-specific risk be diversified away by investing in both CCL Industries 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 CCL Industries and Madison Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Madison Pacific Properties, you can compare the effects of market volatilities on CCL Industries 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 CCL Industries with a short position of Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Madison Pacific.
Diversification Opportunities for CCL Industries and Madison Pacific
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CCL and Madison is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries 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 CCL Industries 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 CCL Industries 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 CCL Industries i.e., CCL Industries and Madison Pacific go up and down completely randomly.
Pair Corralation between CCL Industries and Madison Pacific
Assuming the 90 days trading horizon CCL Industries is expected to generate 3.81 times less return on investment than Madison Pacific. But when comparing it to its historical volatility, CCL Industries is 2.12 times less risky than Madison Pacific. It trades about 0.04 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 237.00 in Madison Pacific Properties on October 12, 2024 and sell it today you would earn a total of 259.00 from holding Madison Pacific Properties or generate 109.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Madison Pacific Properties
Performance |
| Timeline |
| CCL Industries |
| Madison Pacific Prop |
CCL Industries and Madison Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Madison Pacific
The main advantage of trading using opposite CCL Industries and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries 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.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
| Madison Pacific vs. Melcor Developments | Madison Pacific vs. Wall Financial | Madison Pacific vs. Genesis Land Development | Madison Pacific vs. Mainstreet Equity Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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