Correlation Between Madison Square and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Madison Square and Carnival Plc 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 Carnival Plc 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 Carnival Plc ADS, you can compare the effects of market volatilities on Madison Square and Carnival Plc 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 Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Carnival Plc.
Diversification Opportunities for Madison Square and Carnival Plc
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Madison and Carnival is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS 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 Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Madison Square i.e., Madison Square and Carnival Plc go up and down completely randomly.
Pair Corralation between Madison Square and Carnival Plc
Given the investment horizon of 90 days Madison Square is expected to generate 2.18 times less return on investment than Carnival Plc. But when comparing it to its historical volatility, Madison Square Garden is 1.59 times less risky than Carnival Plc. It trades about 0.05 of its potential returns per unit of risk. Carnival Plc ADS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,615 in Carnival Plc ADS on September 2, 2024 and sell it today you would earn a total of 684.00 from holding Carnival Plc ADS or generate 42.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Carnival Plc ADS
Performance |
| Timeline |
| Madison Square Garden |
| Carnival Plc ADS |
Madison Square and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Carnival Plc
The main advantage of trading using opposite Madison Square and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.| Madison Square vs. ADTRAN Inc | Madison Square vs. Belden Inc | Madison Square vs. ADC Therapeutics SA | Madison Square vs. Comtech Telecommunications Corp |
| Carnival Plc vs. Callaway Golf | Carnival Plc vs. Peloton Interactive | Carnival Plc vs. Vista Outdoor | Carnival Plc vs. Clarus Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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