Correlation Between Madison Pacific and Morguard
Can any of the company-specific risk be diversified away by investing in both Madison Pacific and Morguard 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 Morguard 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 Morguard, you can compare the effects of market volatilities on Madison Pacific and Morguard 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 Morguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Morguard.
Diversification Opportunities for Madison Pacific and Morguard
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Madison and Morguard is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and Morguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard 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 Morguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard has no effect on the direction of Madison Pacific i.e., Madison Pacific and Morguard go up and down completely randomly.
Pair Corralation between Madison Pacific and Morguard
Assuming the 90 days trading horizon Madison Pacific Properties is expected to under-perform the Morguard. But the stock apears to be less risky and, when comparing its historical volatility, Madison Pacific Properties is 1.46 times less risky than Morguard. The stock trades about -0.31 of its potential returns per unit of risk. The Morguard is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 12,250 in Morguard on August 31, 2024 and sell it today you would lose (283.00) from holding Morguard or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Pacific Properties vs. Morguard
Performance |
| Timeline |
| Madison Pacific Prop |
| Morguard |
Madison Pacific and Morguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Pacific and Morguard
The main advantage of trading using opposite Madison Pacific and Morguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Pacific position performs unexpectedly, Morguard 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 Morguard will offset losses from the drop in Morguard'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 |
| Morguard vs. Morguard Real Estate | Morguard vs. Mainstreet Equity Corp | Morguard vs. Morguard North American | Morguard vs. Melcor Developments |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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