Correlation Between Madison Square and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Madison Square and Axalta Coating 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 Axalta Coating 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 Axalta Coating Systems, you can compare the effects of market volatilities on Madison Square and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Axalta Coating.
Diversification Opportunities for Madison Square and Axalta Coating
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Madison and Axalta is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Madison Square i.e., Madison Square and Axalta Coating go up and down completely randomly.
Pair Corralation between Madison Square and Axalta Coating
Given the investment horizon of 90 days Madison Square is expected to generate 3.38 times less return on investment than Axalta Coating. In addition to that, Madison Square is 1.29 times more volatile than Axalta Coating Systems. It trades about 0.01 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.05 per unit of volatility. If you would invest 3,167 in Axalta Coating Systems on August 31, 2024 and sell it today you would earn a total of 879.00 from holding Axalta Coating Systems or generate 27.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Axalta Coating Systems
Performance |
| Timeline |
| Madison Square Garden |
| Axalta Coating Systems |
Madison Square and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Axalta Coating
The main advantage of trading using opposite Madison Square and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Madison Square vs. Madison Square Garden | Madison Square vs. Graham Holdings Co | Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Live Nation Entertainment |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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