Correlation Between Oaktree Diversifiedome and Madison Core

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

By analyzing existing cross correlation between Oaktree Diversifiedome and Madison E Bond, you can compare the effects of market volatilities on Oaktree Diversifiedome and Madison Core 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 Oaktree Diversifiedome with a short position of Madison Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oaktree Diversifiedome and Madison Core.

Diversification Opportunities for Oaktree Diversifiedome and Madison Core

0.65

Correlation Coefficient

Oaktree Diversifiedome  Madison Core

Poor diversification

The 3 months correlation between Oaktree and Madison is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Diversifiedome and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond and Oaktree Diversifiedome 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 Oaktree Diversifiedome are associated (or correlated) with Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Oaktree Diversifiedome i.e., Oaktree Diversifiedome and Madison Core go up and down completely randomly.

Pair Corralation between Oaktree Diversifiedome and Madison Core

Assuming the 90 days horizon Oaktree Diversifiedome is expected to under-perform the Madison Core. In addition to that, Oaktree Diversifiedome is 1.23 times more volatile than Madison E Bond. It trades about -0.06 of its total potential returns per unit of risk. Madison E Bond is currently generating about 0.14 per unit of volatility. If you would invest  883.00  in Madison E Bond on December 29, 2024 and sell it today you would earn a total of  21.00  from holding Madison E Bond or generate 2.38% return on investment over 90 days.

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

Oaktree Diversifiedome  vs.  Madison E Bond

Oaktree Diversifiedome

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oaktree Diversifiedome has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Oaktree Diversifiedome is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Madison E Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Madison E Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Madison Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oaktree Diversifiedome and Madison Core

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

The idea behind Oaktree Diversifiedome and Madison E Bond 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.