Correlation Between Madison Square and Edgewell Personal

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Can any of the company-specific risk be diversified away by investing in both Madison Square and Edgewell Personal 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 Edgewell Personal 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 Edgewell Personal Care, you can compare the effects of market volatilities on Madison Square and Edgewell Personal 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 Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Edgewell Personal.

Diversification Opportunities for Madison Square and Edgewell Personal

MadisonEdgewellDiversified AwayMadisonEdgewellDiversified Away100%
-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Madison and Edgewell is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Madison Square i.e., Madison Square and Edgewell Personal go up and down completely randomly.

Pair Corralation between Madison Square and Edgewell Personal

Given the investment horizon of 90 days Madison Square Garden is expected to generate 0.54 times more return on investment than Edgewell Personal. However, Madison Square Garden is 1.85 times less risky than Edgewell Personal. It trades about 0.09 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.24 per unit of risk. If you would invest  3,624  in Madison Square Garden on November 20, 2024 and sell it today you would earn a total of  81.00  from holding Madison Square Garden or generate 2.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Madison Square Garden  vs.  Edgewell Personal Care

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15MSGE EPC
       Timeline  
Madison Square Garden 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Madison Square Garden are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Madison Square is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb33343536373839
Edgewell Personal Care 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb283032343638

Madison Square and Edgewell Personal Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.91-4.42-2.94-1.460.02471.493.014.536.05 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15MSGE EPC
       Returns  

Pair Trading with Madison Square and Edgewell Personal

The main advantage of trading using opposite Madison Square and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.
The idea behind Madison Square Garden and Edgewell Personal Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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