Correlation Between Madison Pacific and Goodfellow
Can any of the company-specific risk be diversified away by investing in both Madison Pacific and Goodfellow 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 Goodfellow 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 Goodfellow, you can compare the effects of market volatilities on Madison Pacific and Goodfellow 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 Goodfellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Goodfellow.
Diversification Opportunities for Madison Pacific and Goodfellow
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Madison and Goodfellow is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow 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 Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Madison Pacific i.e., Madison Pacific and Goodfellow go up and down completely randomly.
Pair Corralation between Madison Pacific and Goodfellow
Assuming the 90 days trading horizon Madison Pacific Properties is expected to under-perform the Goodfellow. But the stock apears to be less risky and, when comparing its historical volatility, Madison Pacific Properties is 1.14 times less risky than Goodfellow. The stock trades about -0.42 of its potential returns per unit of risk. The Goodfellow is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Goodfellow on August 31, 2024 and sell it today you would earn a total of 26.00 from holding Goodfellow or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Pacific Properties vs. Goodfellow
Performance |
| Timeline |
| Madison Pacific Prop |
| Goodfellow |
Madison Pacific and Goodfellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Pacific and Goodfellow
The main advantage of trading using opposite Madison Pacific and Goodfellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Pacific position performs unexpectedly, Goodfellow 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 Goodfellow will offset losses from the drop in Goodfellow's long position.| Madison Pacific vs. Melcor Developments | Madison Pacific vs. Wall Financial | Madison Pacific vs. Genesis Land Development | Madison Pacific vs. Mainstreet Equity Corp |
| Goodfellow vs. Algoma Central | Goodfellow vs. Taiga Building Products | Goodfellow vs. Conifex Timber | Goodfellow vs. Acadian Timber Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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