Correlation Between NYSE Composite and Madison Investors
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Madison Investors 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 NYSE Composite and Madison Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Madison Investors Fund, you can compare the effects of market volatilities on NYSE Composite and Madison Investors 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 NYSE Composite with a short position of Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Madison Investors.
Diversification Opportunities for NYSE Composite and Madison Investors
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Madison is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Madison Investors Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors and NYSE Composite 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 NYSE Composite are associated (or correlated) with Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of NYSE Composite i.e., NYSE Composite and Madison Investors go up and down completely randomly.
Pair Corralation between NYSE Composite and Madison Investors
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.55 times less return on investment than Madison Investors. But when comparing it to its historical volatility, NYSE Composite is 1.53 times less risky than Madison Investors. It trades about 0.23 of its potential returns per unit of risk. Madison Investors Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,070 in Madison Investors Fund on August 29, 2024 and sell it today you would earn a total of 156.00 from holding Madison Investors Fund or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Madison Investors Fund
Performance |
| Timeline |
NYSE Composite and Madison Investors Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Madison Investors Fund
Pair trading matchups for Madison Investors
Pair Trading with NYSE Composite and Madison Investors
The main advantage of trading using opposite NYSE Composite and Madison Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Madison Investors 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 Investors will offset losses from the drop in Madison Investors' long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Madison Investors vs. Massmutual Premier Diversified | Madison Investors vs. Pioneer Diversified High | Madison Investors vs. Adams Diversified Equity | Madison Investors vs. Jhancock Diversified Macro |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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