Correlation Between Madison Square and Cable One
Can any of the company-specific risk be diversified away by investing in both Madison Square and Cable One 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 Cable One 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 Cable One, you can compare the effects of market volatilities on Madison Square and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Cable One.
Diversification Opportunities for Madison Square and Cable One
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Madison and Cable is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Madison Square i.e., Madison Square and Cable One go up and down completely randomly.
Pair Corralation between Madison Square and Cable One
Given the investment horizon of 90 days Madison Square Garden is expected to generate 0.62 times more return on investment than Cable One. However, Madison Square Garden is 1.62 times less risky than Cable One. It trades about 0.0 of its potential returns per unit of risk. Cable One is currently generating about -0.06 per unit of risk. If you would invest 3,673 in Madison Square Garden on November 8, 2024 and sell it today you would lose (86.00) from holding Madison Square Garden or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Cable One
Performance |
| Timeline |
| Madison Square Garden |
| Cable One |
Madison Square and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Cable One
The main advantage of trading using opposite Madison Square and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One'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 |
| Cable One vs. Liberty Broadband Srs | Cable One vs. Liberty Broadband Corp | Cable One vs. Telkom Indonesia Tbk | Cable One vs. Liberty Global PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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