Correlation Between MADISON FINANCIAL and STANDARD CHARTERED

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Can any of the company-specific risk be diversified away by investing in both MADISON FINANCIAL and STANDARD CHARTERED 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 MADISON FINANCIAL and STANDARD CHARTERED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MADISON FINANCIAL SERVICES and STANDARD CHARTERED BANK, you can compare the effects of market volatilities on MADISON FINANCIAL and STANDARD CHARTERED 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 MADISON FINANCIAL with a short position of STANDARD CHARTERED. Check out your portfolio center. Please also check ongoing floating volatility patterns of MADISON FINANCIAL and STANDARD CHARTERED.

Diversification Opportunities for MADISON FINANCIAL and STANDARD CHARTERED

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between MADISON and STANDARD is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MADISON FINANCIAL SERVICES and STANDARD CHARTERED BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD CHARTERED BANK and MADISON FINANCIAL 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 MADISON FINANCIAL SERVICES are associated (or correlated) with STANDARD CHARTERED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD CHARTERED BANK has no effect on the direction of MADISON FINANCIAL i.e., MADISON FINANCIAL and STANDARD CHARTERED go up and down completely randomly.

Pair Corralation between MADISON FINANCIAL and STANDARD CHARTERED

Assuming the 90 days trading horizon MADISON FINANCIAL is expected to generate 47.83 times less return on investment than STANDARD CHARTERED. But when comparing it to its historical volatility, MADISON FINANCIAL SERVICES is 7.11 times less risky than STANDARD CHARTERED. It trades about 0.0 of its potential returns per unit of risk. STANDARD CHARTERED BANK is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  250.00  in STANDARD CHARTERED BANK on November 4, 2024 and sell it today you would earn a total of  0.00  from holding STANDARD CHARTERED BANK or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

MADISON FINANCIAL SERVICES  vs.  STANDARD CHARTERED BANK

 Performance 
       Timeline  
MADISON FINANCIAL 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days MADISON FINANCIAL SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MADISON FINANCIAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
STANDARD CHARTERED BANK 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STANDARD CHARTERED BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MADISON FINANCIAL and STANDARD CHARTERED Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MADISON FINANCIAL and STANDARD CHARTERED

The main advantage of trading using opposite MADISON FINANCIAL and STANDARD CHARTERED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MADISON FINANCIAL position performs unexpectedly, STANDARD CHARTERED 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 STANDARD CHARTERED will offset losses from the drop in STANDARD CHARTERED's long position.
The idea behind MADISON FINANCIAL SERVICES and STANDARD CHARTERED BANK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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