Correlation Between Blackrock International and Madison Investors

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

By analyzing existing cross correlation between Blackrock International Index and Madison Investors Fund, you can compare the effects of market volatilities on Blackrock International and Madison Investors 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 Blackrock International with a short position of Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and Madison Investors.

Diversification Opportunities for Blackrock International and Madison Investors

-0.5

Correlation Coefficient

Blackrock International  Madison Investors

Very good diversification

The 3 months correlation between Blackrock and Madison is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and Madison Investors Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors and Blackrock International 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 Blackrock International Index are associated (or correlated) with Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of Blackrock International i.e., Blackrock International and Madison Investors go up and down completely randomly.

Pair Corralation between Blackrock International and Madison Investors

Assuming the 90 days horizon Blackrock International Index is expected to under-perform the Madison Investors. In addition to that, Blackrock International is 1.06 times more volatile than Madison Investors Fund. It trades about -0.03 of its total potential returns per unit of risk. Madison Investors Fund is currently generating about 0.14 per unit of volatility. If you would invest  2,984  in Madison Investors Fund on September 12, 2024 and sell it today you would earn a total of  202.00  from holding Madison Investors Fund or generate 6.77% return on investment over 90 days.

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

Blackrock International Index  vs.  Madison Investors Fund

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Madison Investors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Investors Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Madison Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock International and Madison Investors

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

The idea behind Blackrock International Index and Madison Investors Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.