Correlation Between Madison Square and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Madison Square and Charter Communications 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 Square and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Square Garden and Charter Communications, you can compare the effects of market volatilities on Madison Square and Charter Communications 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 Square with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Charter Communications.
Diversification Opportunities for Madison Square and Charter Communications
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and Charter is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Madison Square 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 Square Garden are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Madison Square i.e., Madison Square and Charter Communications go up and down completely randomly.
Pair Corralation between Madison Square and Charter Communications
Assuming the 90 days horizon Madison Square Garden is expected to generate 0.55 times more return on investment than Charter Communications. However, Madison Square Garden is 1.83 times less risky than Charter Communications. It trades about 0.1 of its potential returns per unit of risk. Charter Communications is currently generating about 0.03 per unit of risk. If you would invest 15,600 in Madison Square Garden on September 3, 2024 and sell it today you would earn a total of 6,000 from holding Madison Square Garden or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Charter Communications
Performance |
| Timeline |
| Madison Square Garden |
| Charter Communications |
Madison Square and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Charter Communications
The main advantage of trading using opposite Madison Square and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Madison Square vs. Plastic Omnium | Madison Square vs. PSI Software AG | Madison Square vs. Goodyear Tire Rubber | Madison Square vs. Constellation Software |
| Charter Communications vs. Playa Hotels Resorts | Charter Communications vs. NH HOTEL GROUP | Charter Communications vs. RYU Apparel | Charter Communications vs. Pebblebrook Hotel Trust |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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