Correlation Between Madison Funds and Bond Fund
Can any of the company-specific risk be diversified away by investing in both Madison Funds and Bond Fund 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 Funds and Bond Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Funds and Bond Fund Of, you can compare the effects of market volatilities on Madison Funds and Bond Fund 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 Funds with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Funds and Bond Fund.
Diversification Opportunities for Madison Funds and Bond Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Madison and Bond is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Madison Funds and Bond Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and Madison Funds 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 Funds are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Madison Funds i.e., Madison Funds and Bond Fund go up and down completely randomly.
Pair Corralation between Madison Funds and Bond Fund
Assuming the 90 days horizon Madison Funds is expected to generate 0.93 times more return on investment than Bond Fund. However, Madison Funds is 1.08 times less risky than Bond Fund. It trades about -0.04 of its potential returns per unit of risk. Bond Fund Of is currently generating about -0.06 per unit of risk. If you would invest 905.00 in Madison Funds on September 3, 2024 and sell it today you would lose (6.00) from holding Madison Funds or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Funds vs. Bond Fund Of
Performance |
| Timeline |
| Madison Funds |
| Bond Fund |
Madison Funds and Bond Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Funds and Bond Fund
The main advantage of trading using opposite Madison Funds and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Funds position performs unexpectedly, Bond Fund 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 Bond Fund will offset losses from the drop in Bond Fund's long position.| Madison Funds vs. Vanguard Total Bond | Madison Funds vs. Vanguard Total Bond | Madison Funds vs. Vanguard Total Bond | Madison Funds vs. Vanguard Total Bond |
| Bond Fund vs. American High Income | Bond Fund vs. Europacific Growth Fund | Bond Fund vs. Capital World Bond | Bond Fund vs. Growth Fund Of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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