Correlation Between Cognios Large and Madison Small
Can any of the company-specific risk be diversified away by investing in both Cognios Large and Madison Small 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 Cognios Large and Madison Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognios Large Cap and Madison Small Cap, you can compare the effects of market volatilities on Cognios Large and Madison Small 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 Cognios Large with a short position of Madison Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognios Large and Madison Small.
Diversification Opportunities for Cognios Large and Madison Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cognios and Madison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cognios Large Cap and Madison Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Small Cap and Cognios Large 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 Cognios Large Cap are associated (or correlated) with Madison Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Small Cap has no effect on the direction of Cognios Large i.e., Cognios Large and Madison Small go up and down completely randomly.
Pair Corralation between Cognios Large and Madison Small
If you would invest 1,064 in Madison Small Cap on December 11, 2024 and sell it today you would lose (16.00) from holding Madison Small Cap or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Cognios Large Cap vs. Madison Small Cap
Performance |
| Timeline |
| Cognios Large Cap |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Madison Small Cap |
Cognios Large and Madison Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognios Large and Madison Small
The main advantage of trading using opposite Cognios Large and Madison Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognios Large position performs unexpectedly, Madison Small 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 Small will offset losses from the drop in Madison Small's long position.| Cognios Large vs. Cognios Market Neutral | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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