Correlation Between MT Bank and Madison Square
Can any of the company-specific risk be diversified away by investing in both MT Bank and Madison Square 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 MT Bank and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Madison Square Garden, you can compare the effects of market volatilities on MT Bank and Madison Square 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 MT Bank with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Madison Square.
Diversification Opportunities for MT Bank and Madison Square
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTZ and Madison is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden and MT Bank 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 MT Bank Corp are associated (or correlated) with Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of MT Bank i.e., MT Bank and Madison Square go up and down completely randomly.
Pair Corralation between MT Bank and Madison Square
Assuming the 90 days horizon MT Bank Corp is expected to generate 1.91 times more return on investment than Madison Square. However, MT Bank is 1.91 times more volatile than Madison Square Garden. It trades about 0.28 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.24 per unit of risk. If you would invest 17,560 in MT Bank Corp on September 3, 2024 and sell it today you would earn a total of 3,270 from holding MT Bank Corp or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank Corp vs. Madison Square Garden
Performance |
| Timeline |
| MT Bank Corp |
| Madison Square Garden |
MT Bank and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Madison Square
The main advantage of trading using opposite MT Bank and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Madison Square 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 Madison Square will offset losses from the drop in Madison Square's long position.| MT Bank vs. AXWAY SOFTWARE EO | MT Bank vs. FORMPIPE SOFTWARE AB | MT Bank vs. FLOW TRADERS LTD | MT Bank vs. Constellation Software |
| Madison Square vs. Plastic Omnium | Madison Square vs. PSI Software AG | Madison Square vs. Goodyear Tire Rubber | Madison Square vs. Constellation Software |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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