Correlation Between Madison Square and Six Flags
Can any of the company-specific risk be diversified away by investing in both Madison Square and Six Flags 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 Six Flags 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 Six Flags Entertainment, you can compare the effects of market volatilities on Madison Square and Six Flags 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 Six Flags. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Six Flags.
Diversification Opportunities for Madison Square and Six Flags
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Madison and Six is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment 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 Six Flags. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of Madison Square i.e., Madison Square and Six Flags go up and down completely randomly.
Pair Corralation between Madison Square and Six Flags
Given the investment horizon of 90 days Madison Square Garden is expected to under-perform the Six Flags. In addition to that, Madison Square is 1.15 times more volatile than Six Flags Entertainment. It trades about -0.24 of its total potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.18 per unit of volatility. If you would invest 4,211 in Six Flags Entertainment on August 27, 2024 and sell it today you would earn a total of 363.00 from holding Six Flags Entertainment or generate 8.62% 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. Six Flags Entertainment
Performance |
| Timeline |
| Madison Square Garden |
| Six Flags Entertainment |
Madison Square and Six Flags Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Six Flags
The main advantage of trading using opposite Madison Square and Six Flags positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Six Flags 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 Six Flags will offset losses from the drop in Six Flags' 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 |
| Six Flags vs. Planet Fitness | Six Flags vs. Madison Square Garden | Six Flags vs. Mattel Inc | Six Flags vs. Johnson Outdoors |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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