Correlation Between Premium Income and Madison Pacific
Can any of the company-specific risk be diversified away by investing in both Premium Income and Madison Pacific 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 Premium Income and Madison Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Income and Madison Pacific Properties, you can compare the effects of market volatilities on Premium Income and Madison Pacific 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 Premium Income with a short position of Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Income and Madison Pacific.
Diversification Opportunities for Premium Income and Madison Pacific
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Premium and Madison is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop and Premium Income 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 Premium Income are associated (or correlated) with Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of Premium Income i.e., Premium Income and Madison Pacific go up and down completely randomly.
Pair Corralation between Premium Income and Madison Pacific
Assuming the 90 days trading horizon Premium Income is expected to under-perform the Madison Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Premium Income is 2.83 times less risky than Madison Pacific. The stock trades about -0.23 of its potential returns per unit of risk. The Madison Pacific Properties is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 425.00 in Madison Pacific Properties on November 18, 2024 and sell it today you would earn a total of 5.00 from holding Madison Pacific Properties or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Income vs. Madison Pacific Properties
Performance |
| Timeline |
| Premium Income |
| Madison Pacific Prop |
Premium Income and Madison Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Income and Madison Pacific
The main advantage of trading using opposite Premium Income and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Income position performs unexpectedly, Madison Pacific 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 Pacific will offset losses from the drop in Madison Pacific's long position.| Premium Income vs. Sprott Physical Gold | Premium Income vs. Brompton Split Banc | Premium Income vs. TDb Split Corp | Premium Income vs. Prime Dividend Corp |
| Madison Pacific vs. CI Financial Corp | Madison Pacific vs. Intact Financial Corp | Madison Pacific vs. Fairfax Financial Holdings | Madison Pacific vs. Hampton Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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