Correlation Between Madison Square and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both Madison Square and Graham Holdings 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 Graham Holdings 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 Graham Holdings Co, you can compare the effects of market volatilities on Madison Square and Graham Holdings 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 Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Graham Holdings.
Diversification Opportunities for Madison Square and Graham Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Madison and Graham is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Madison Square i.e., Madison Square and Graham Holdings go up and down completely randomly.
Pair Corralation between Madison Square and Graham Holdings
Given the investment horizon of 90 days Madison Square Garden is expected to under-perform the Graham Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Madison Square Garden is 1.24 times less risky than Graham Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The Graham Holdings Co is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 77,858 in Graham Holdings Co on August 27, 2024 and sell it today you would earn a total of 16,552 from holding Graham Holdings Co or generate 21.26% 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. Graham Holdings Co
Performance |
| Timeline |
| Madison Square Garden |
| Graham Holdings |
Madison Square and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Graham Holdings
The main advantage of trading using opposite Madison Square and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' 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 |
| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Madison Square Garden |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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