Correlation Between Madison International and Madison Mid
Can any of the company-specific risk be diversified away by investing in both Madison International and Madison Mid 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 International and Madison Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison International Stock and Madison Mid Cap, you can compare the effects of market volatilities on Madison International and Madison Mid 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 International with a short position of Madison Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison International and Madison Mid.
Diversification Opportunities for Madison International and Madison Mid
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Madison and Madison is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Madison International Stock and Madison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Mid Cap and Madison International 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 International Stock are associated (or correlated) with Madison Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Mid Cap has no effect on the direction of Madison International i.e., Madison International and Madison Mid go up and down completely randomly.
Pair Corralation between Madison International and Madison Mid
Assuming the 90 days horizon Madison International Stock is expected to generate 0.4 times more return on investment than Madison Mid. However, Madison International Stock is 2.48 times less risky than Madison Mid. It trades about 0.03 of its potential returns per unit of risk. Madison Mid Cap is currently generating about -0.05 per unit of risk. If you would invest 913.00 in Madison International Stock on October 20, 2024 and sell it today you would earn a total of 3.00 from holding Madison International Stock or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison International Stock vs. Madison Mid Cap
Performance |
| Timeline |
| Madison International |
| Madison Mid Cap |
Madison International and Madison Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison International and Madison Mid
The main advantage of trading using opposite Madison International and Madison Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison International position performs unexpectedly, Madison Mid 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 Mid will offset losses from the drop in Madison Mid's long position.| Madison International vs. Madison Mid Cap | Madison International vs. Madison Moderate Allocation | Madison International vs. Madison Moderate Allocation | Madison International vs. Madison Investors Fund |
| Madison Mid vs. Madison Moderate Allocation | Madison Mid vs. Madison Moderate Allocation | Madison Mid vs. Madison Investors Fund | Madison Mid vs. Madison Investors Fund |
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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