Correlation Between Madison Square and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Madison Square and Liberty Media 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 Liberty Media 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 Liberty Media, you can compare the effects of market volatilities on Madison Square and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Liberty Media.
Diversification Opportunities for Madison Square and Liberty Media
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and Liberty is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Madison Square i.e., Madison Square and Liberty Media go up and down completely randomly.
Pair Corralation between Madison Square and Liberty Media
Given the investment horizon of 90 days Madison Square is expected to generate 1.54 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Madison Square Garden is 1.59 times less risky than Liberty Media. It trades about 0.13 of its potential returns per unit of risk. Liberty Media is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,006 in Liberty Media on August 27, 2024 and sell it today you would earn a total of 411.00 from holding Liberty Media or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Liberty Media
Performance |
| Timeline |
| Madison Square Garden |
| Liberty Media |
Madison Square and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Liberty Media
The main advantage of trading using opposite Madison Square and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Liberty Media | Madison Square vs. Liberty Media | Madison Square vs. Atlanta Braves Holdings, |
| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A | Liberty Media vs. Atlanta Braves Holdings, |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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