Correlation Between Madison Pacific and Boat Rocker

Can any of the company-specific risk be diversified away by investing in both Madison Pacific and Boat Rocker 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 Boat Rocker 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 Boat Rocker Media, you can compare the effects of market volatilities on Madison Pacific and Boat Rocker 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 Boat Rocker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Boat Rocker.

Diversification Opportunities for Madison Pacific and Boat Rocker

-0.05

Correlation Coefficient

Madison Pacific  Boat Rocker

Good diversification

The 3 months correlation between Madison and Boat is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and Boat Rocker Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boat Rocker Media 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 Boat Rocker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boat Rocker Media has no effect on the direction of Madison Pacific i.e., Madison Pacific and Boat Rocker go up and down completely randomly.

Pair Corralation between Madison Pacific and Boat Rocker

Assuming the 90 days trading horizon Madison Pacific is expected to generate 16.8 times less return on investment than Boat Rocker. But when comparing it to its historical volatility, Madison Pacific Properties is 1.82 times less risky than Boat Rocker. It trades about 0.02 of its potential returns per unit of risk. Boat Rocker Media is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Boat Rocker Media on December 22, 2024 and sell it today you would earn a total of  18.00  from holding Boat Rocker Media or generate 29.03% return on investment over 90 days.

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

Madison Pacific Properties  vs.  Boat Rocker Media

Madison Pacific Prop

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Pacific Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Madison Pacific is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Boat Rocker Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Madison Pacific and Boat Rocker

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

The idea behind Madison Pacific Properties and Boat Rocker Media 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.