Correlation Between Spinnaker ETF and Madison Covered

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

By analyzing existing cross correlation between Spinnaker ETF Series and Madison Covered Call, you can compare the effects of market volatilities on Spinnaker ETF and Madison Covered 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 Spinnaker ETF with a short position of Madison Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spinnaker ETF and Madison Covered.

Diversification Opportunities for Spinnaker ETF and Madison Covered

-0.91

Correlation Coefficient

Spinnaker ETF  Madison Covered

Pay attention - limited upside

The 3 months correlation between Spinnaker and Madison is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Spinnaker ETF Series and Madison Covered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Covered Call and Spinnaker ETF 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 Spinnaker ETF Series are associated (or correlated) with Madison Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Covered Call has no effect on the direction of Spinnaker ETF i.e., Spinnaker ETF and Madison Covered go up and down completely randomly.

Pair Corralation between Spinnaker ETF and Madison Covered

Given the investment horizon of 90 days Spinnaker ETF Series is expected to generate 0.38 times more return on investment than Madison Covered. However, Spinnaker ETF Series is 2.65 times less risky than Madison Covered. It trades about 0.22 of its potential returns per unit of risk. Madison Covered Call is currently generating about -0.19 per unit of risk. If you would invest  1,001  in Spinnaker ETF Series on December 30, 2024 and sell it today you would earn a total of  26.00  from holding Spinnaker ETF Series or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Spinnaker ETF Series  vs.  Madison Covered Call

Spinnaker ETF Series

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spinnaker ETF Series are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Spinnaker ETF is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Madison Covered Call

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Covered Call has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Madison Covered is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Spinnaker ETF and Madison Covered

The main advantage of trading using opposite Spinnaker ETF and Madison Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spinnaker ETF position performs unexpectedly, Madison Covered 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 Covered will offset losses from the drop in Madison Covered's long position.

The idea behind Spinnaker ETF Series and Madison Covered Call 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.