Correlation Between Madison Dividend and Us Government

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

By analyzing existing cross correlation between Madison Dividend Income and Us Government Securities, you can compare the effects of market volatilities on Madison Dividend and Us Government 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 Dividend with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Dividend and Us Government.

Diversification Opportunities for Madison Dividend and Us Government

0.88

Correlation Coefficient

Madison Dividend  Us Government

Very poor diversification

The 3 months correlation between Madison and UGSDX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Madison Dividend Income and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Madison Dividend 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 Dividend Income are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Madison Dividend i.e., Madison Dividend and Us Government go up and down completely randomly.

Pair Corralation between Madison Dividend and Us Government

Assuming the 90 days horizon Madison Dividend Income is expected to generate 10.67 times more return on investment than Us Government. However, Madison Dividend is 10.67 times more volatile than Us Government Securities. It trades about 0.18 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.13 per unit of risk. If you would invest  2,472  in Madison Dividend Income on April 30, 2025 and sell it today you would earn a total of  193.00  from holding Madison Dividend Income or generate 7.81% return on investment over 90 days.

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

Madison Dividend Income  vs.  Us Government Securities

Madison Dividend Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Dividend Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Madison Dividend may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Us Government Securities

Risk-Adjusted Performance

OK

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

Pair Trading with Madison Dividend and Us Government

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

The idea behind Madison Dividend Income and Us Government Securities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.