Correlation Between Madison Diversified and Oppenheimer Disciplined

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

Diversification Opportunities for Madison Diversified and Oppenheimer Disciplined

MadisonOppenheimerDiversified AwayMadisonOppenheimerDiversified Away100%
0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Madison and Oppenheimer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Madison Diversified Income and Oppenheimer Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Disciplined and Madison Diversified 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 Diversified Income are associated (or correlated) with Oppenheimer Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Disciplined has no effect on the direction of Madison Diversified i.e., Madison Diversified and Oppenheimer Disciplined go up and down completely randomly.

Pair Corralation between Madison Diversified and Oppenheimer Disciplined

Assuming the 90 days horizon Madison Diversified Income is expected to generate 0.28 times more return on investment than Oppenheimer Disciplined. However, Madison Diversified Income is 3.55 times less risky than Oppenheimer Disciplined. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Disciplined Value is currently generating about 0.0 per unit of risk. If you would invest  1,220  in Madison Diversified Income on November 21, 2024 and sell it today you would earn a total of  63.00  from holding Madison Diversified Income or generate 5.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.56%
ValuesDaily Returns

Madison Diversified Income  vs.  Oppenheimer Disciplined Value

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15MBLAX CGRYX
       Timeline  
Madison Diversified 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Madison Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Madison Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb12.5512.612.6512.712.7512.812.8512.912.95
Oppenheimer Disciplined 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Oppenheimer Disciplined Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3233343536373839

Madison Diversified and Oppenheimer Disciplined Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.99-0.71-0.43-0.15-0.0042440.130.410.690.971.25 1234
JavaScript chart by amCharts 3.21.15MBLAX CGRYX
       Returns  

Pair Trading with Madison Diversified and Oppenheimer Disciplined

The main advantage of trading using opposite Madison Diversified and Oppenheimer Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Diversified position performs unexpectedly, Oppenheimer Disciplined 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 Oppenheimer Disciplined will offset losses from the drop in Oppenheimer Disciplined's long position.
The idea behind Madison Diversified Income and Oppenheimer Disciplined Value 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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