Correlation Between Edgewell Personal and Madison Square
Can any of the company-specific risk be diversified away by investing in both Edgewell Personal and Madison Square 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 Edgewell Personal and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewell Personal Care and Madison Square Garden, you can compare the effects of market volatilities on Edgewell Personal and Madison Square 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 Edgewell Personal with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and Madison Square.
Diversification Opportunities for Edgewell Personal and Madison Square
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Edgewell and Madison is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and Madison Square go up and down completely randomly.
Pair Corralation between Edgewell Personal and Madison Square
Considering the 90-day investment horizon Edgewell Personal Care is expected to under-perform the Madison Square. But the stock apears to be less risky and, when comparing its historical volatility, Edgewell Personal Care is 2.08 times less risky than Madison Square. The stock trades about -0.02 of its potential returns per unit of risk. The Madison Square Garden is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,780 in Madison Square Garden on November 1, 2024 and sell it today you would lose (2,163) from holding Madison Square Garden or give up 37.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewell Personal Care vs. Madison Square Garden
Performance |
| Timeline |
| Edgewell Personal Care |
| Madison Square Garden |
Edgewell Personal and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewell Personal and Madison Square
The main advantage of trading using opposite Edgewell Personal and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal position performs unexpectedly, Madison Square 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 Square will offset losses from the drop in Madison Square's long position.| Edgewell Personal vs. Mannatech Incorporated | Edgewell Personal vs. Inter Parfums | Edgewell Personal vs. Nu Skin Enterprises | Edgewell Personal vs. Helen of Troy |
| Madison Square vs. Madison Square Garden | Madison Square vs. Graham Holdings Co | Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Live Nation Entertainment |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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