Correlation Between Madison Diversified and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Madison Diversified and Inflation-protected 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 Inflation-protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Madison Diversified and Inflation-protected 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 Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Diversified and Inflation-protected.
Diversification Opportunities for Madison Diversified and Inflation-protected
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Madison and Inflation-protected is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Madison Diversified Income and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Madison Diversified i.e., Madison Diversified and Inflation-protected go up and down completely randomly.
Pair Corralation between Madison Diversified and Inflation-protected
Assuming the 90 days horizon Madison Diversified is expected to generate 1.53 times less return on investment than Inflation-protected. But when comparing it to its historical volatility, Madison Diversified Income is 1.06 times less risky than Inflation-protected. It trades about 0.03 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Inflation Protected Bond Fund on October 11, 2024 and sell it today you would earn a total of 99.00 from holding Inflation Protected Bond Fund or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Diversified Income vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Madison Diversified |
| Inflation Protected |
Madison Diversified and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Diversified and Inflation-protected
The main advantage of trading using opposite Madison Diversified and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Diversified position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected's long position.| Madison Diversified vs. Goldman Sachs Short | Madison Diversified vs. James Balanced Golden | Madison Diversified vs. Oppenheimer Gold Special | Madison Diversified vs. Gamco Global Gold |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |