Correlation Between Canso Select and Madison Pacific

Can any of the company-specific risk be diversified away by investing in both Canso Select 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 Canso Select and Madison Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canso Select Opportunities and Madison Pacific Properties, you can compare the effects of market volatilities on Canso Select 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 Canso Select with a short position of Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Select and Madison Pacific.

Diversification Opportunities for Canso Select and Madison Pacific

-0.28

Correlation Coefficient

Canso Select  Madison Pacific

Very good diversification

The 3 months correlation between Canso and Madison is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canso Select Opportunities 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 Canso Select 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 Canso Select Opportunities 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 Canso Select i.e., Canso Select and Madison Pacific go up and down completely randomly.

Pair Corralation between Canso Select and Madison Pacific

Assuming the 90 days trading horizon Canso Select Opportunities is expected to generate 3.0 times more return on investment than Madison Pacific. However, Canso Select is 3.0 times more volatile than Madison Pacific Properties. It trades about 0.02 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about -0.09 per unit of risk. If you would invest  227.00  in Canso Select Opportunities on October 23, 2024 and sell it today you would lose (2.00) from holding Canso Select Opportunities or give up 0.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Canso Select Opportunities  vs.  Madison Pacific Properties

Canso Select Opportu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Select is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Madison Pacific Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Canso Select and Madison Pacific

The main advantage of trading using opposite Canso Select and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Select 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.

The idea behind Canso Select Opportunities and Madison Pacific Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.