Correlation Between Madison Pacific and Glacier Media

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

Diversification Opportunities for Madison Pacific and Glacier Media

-0.02

Correlation Coefficient

Madison Pacific  Glacier Media

Good diversification

The 3 months correlation between Madison and Glacier is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and Glacier Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier 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 Glacier Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Media has no effect on the direction of Madison Pacific i.e., Madison Pacific and Glacier Media go up and down completely randomly.

Pair Corralation between Madison Pacific and Glacier Media

Assuming the 90 days trading horizon Madison Pacific is expected to generate 5.47 times less return on investment than Glacier Media. But when comparing it to its historical volatility, Madison Pacific Properties is 2.47 times less risky than Glacier Media. It trades about 0.05 of its potential returns per unit of risk. Glacier Media is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Glacier Media on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Glacier Media or generate 33.33% 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.  Glacier Media

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 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.

Glacier Media

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Glacier Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Madison Pacific and Glacier Media

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

The idea behind Madison Pacific Properties and Glacier 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.