Correlation Between Madison Square and Callaway Golf
Can any of the company-specific risk be diversified away by investing in both Madison Square and Callaway Golf 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 Callaway Golf 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 Callaway Golf, you can compare the effects of market volatilities on Madison Square and Callaway Golf 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 Callaway Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Callaway Golf.
Diversification Opportunities for Madison Square and Callaway Golf
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and Callaway is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf 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 Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of Madison Square i.e., Madison Square and Callaway Golf go up and down completely randomly.
Pair Corralation between Madison Square and Callaway Golf
Given the investment horizon of 90 days Madison Square Garden is expected to under-perform the Callaway Golf. But the stock apears to be less risky and, when comparing its historical volatility, Madison Square Garden is 1.23 times less risky than Callaway Golf. The stock trades about -0.24 of its potential returns per unit of risk. The Callaway Golf is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 998.00 in Callaway Golf on August 28, 2024 and sell it today you would lose (113.00) from holding Callaway Golf or give up 11.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Callaway Golf
Performance |
| Timeline |
| Madison Square Garden |
| Callaway Golf |
Madison Square and Callaway Golf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Callaway Golf
The main advantage of trading using opposite Madison Square and Callaway Golf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Callaway Golf 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 Callaway Golf will offset losses from the drop in Callaway Golf'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 |
| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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