Correlation Between Madison Pacific and National Bank
Can any of the company-specific risk be diversified away by investing in both Madison Pacific and National Bank 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 Pacific and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Pacific Properties and National Bank of, you can compare the effects of market volatilities on Madison Pacific and National Bank 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 Pacific with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and National Bank.
Diversification Opportunities for Madison Pacific and National Bank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Madison and National is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Madison Pacific 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 Pacific Properties are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Madison Pacific i.e., Madison Pacific and National Bank go up and down completely randomly.
Pair Corralation between Madison Pacific and National Bank
Assuming the 90 days trading horizon Madison Pacific Properties is expected to generate 5.3 times more return on investment than National Bank. However, Madison Pacific is 5.3 times more volatile than National Bank of. It trades about 0.07 of its potential returns per unit of risk. National Bank of is currently generating about 0.17 per unit of risk. If you would invest 410.00 in Madison Pacific Properties on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Madison Pacific Properties or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Pacific Properties vs. National Bank of
Performance |
| Timeline |
| Madison Pacific Prop |
| National Bank |
Madison Pacific and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Pacific and National Bank
The main advantage of trading using opposite Madison Pacific and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Pacific position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Madison Pacific vs. National Bank of | Madison Pacific vs. Diamond Estates Wines | Madison Pacific vs. Broadcom | Madison Pacific vs. Leveljump Healthcare Corp |
| National Bank vs. Fairfax Financial Holdings | National Bank vs. iShares Canadian HYBrid | National Bank vs. Brompton European Dividend | National Bank vs. Solar Alliance Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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