Correlation Between Madison Funds and Madison Core
Can any of the company-specific risk be diversified away by investing in both Madison Funds and Madison Core 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 Madison Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Funds and Madison E Bond, you can compare the effects of market volatilities on Madison Funds and Madison Core 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 Madison Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Funds and Madison Core.
Diversification Opportunities for Madison Funds and Madison Core
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Madison and Madison is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Madison Funds and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Madison Funds i.e., Madison Funds and Madison Core go up and down completely randomly.
Pair Corralation between Madison Funds and Madison Core
Assuming the 90 days horizon Madison Funds is expected to generate 0.84 times more return on investment than Madison Core. However, Madison Funds is 1.19 times less risky than Madison Core. It trades about 0.16 of its potential returns per unit of risk. Madison E Bond is currently generating about 0.03 per unit of risk. If you would invest 881.00 in Madison Funds on November 4, 2024 and sell it today you would earn a total of 8.00 from holding Madison Funds or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Funds vs. Madison E Bond
Performance |
| Timeline |
| Madison Funds |
| Madison E Bond |
Madison Funds and Madison Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Funds and Madison Core
The main advantage of trading using opposite Madison Funds and Madison Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Funds position performs unexpectedly, Madison Core 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 Core will offset losses from the drop in Madison Core's long position.| Madison Funds vs. Gmo Global Equity | Madison Funds vs. Qs Global Equity | Madison Funds vs. Rbb Fund | Madison Funds vs. Mirova Global Green |
| Madison Core vs. Tfa Alphagen Growth | Madison Core vs. Intal High Relative | Madison Core vs. Scharf Global Opportunity | Madison Core vs. Glg Intl Small |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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