Correlation Between Madison Square and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both Madison Square and Cinemark 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 Cinemark 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 Cinemark Holdings, you can compare the effects of market volatilities on Madison Square and Cinemark 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 Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Cinemark Holdings.
Diversification Opportunities for Madison Square and Cinemark Holdings
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Madison and Cinemark is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark 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 Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of Madison Square i.e., Madison Square and Cinemark Holdings go up and down completely randomly.
Pair Corralation between Madison Square and Cinemark Holdings
Given the investment horizon of 90 days Madison Square is expected to generate 2.88 times less return on investment than Cinemark Holdings. But when comparing it to its historical volatility, Madison Square Garden is 1.52 times less risky than Cinemark Holdings. It trades about 0.15 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,847 in Cinemark Holdings on August 23, 2024 and sell it today you would earn a total of 378.00 from holding Cinemark Holdings or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Cinemark Holdings
Performance |
| Timeline |
| Madison Square Garden |
| Cinemark Holdings |
Madison Square and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Cinemark Holdings
The main advantage of trading using opposite Madison Square and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Cinemark 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 Cinemark Holdings will offset losses from the drop in Cinemark Holdings' long position.| Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Liberty Media | Madison Square vs. Liberty Media | Madison Square vs. Atlanta Braves Holdings, |
| Cinemark Holdings vs. News Corp B | Cinemark Holdings vs. Marcus | Cinemark Holdings vs. Liberty Media | Cinemark Holdings vs. Warner Music Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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