Correlation Between Madison Square and Stagwell
Can any of the company-specific risk be diversified away by investing in both Madison Square and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Madison Square and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Stagwell.
Diversification Opportunities for Madison Square and Stagwell
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Madison and Stagwell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Madison Square i.e., Madison Square and Stagwell go up and down completely randomly.
Pair Corralation between Madison Square and Stagwell
Given the investment horizon of 90 days Madison Square is expected to generate 5.28 times less return on investment than Stagwell. But when comparing it to its historical volatility, Madison Square Garden is 1.94 times less risky than Stagwell. It trades about 0.02 of its potential returns per unit of risk. Stagwell is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 618.00 in Stagwell on October 24, 2024 and sell it today you would earn a total of 35.00 from holding Stagwell or generate 5.66% 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. Stagwell
Performance |
| Timeline |
| Madison Square Garden |
| Stagwell |
Madison Square and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Stagwell
The main advantage of trading using opposite Madison Square and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell'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, |
| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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