Correlation Between Peloton Interactive and Madison Square
Can any of the company-specific risk be diversified away by investing in both Peloton Interactive 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 Peloton Interactive and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Interactive and Madison Square Garden, you can compare the effects of market volatilities on Peloton Interactive 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 Peloton Interactive with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Interactive and Madison Square.
Diversification Opportunities for Peloton Interactive and Madison Square
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Peloton and Madison is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive 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 Peloton Interactive 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 Peloton Interactive 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 Peloton Interactive i.e., Peloton Interactive and Madison Square go up and down completely randomly.
Pair Corralation between Peloton Interactive and Madison Square
Given the investment horizon of 90 days Peloton Interactive is expected to generate 3.04 times more return on investment than Madison Square. However, Peloton Interactive is 3.04 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 640.00 in Peloton Interactive on August 28, 2024 and sell it today you would earn a total of 318.00 from holding Peloton Interactive or generate 49.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peloton Interactive vs. Madison Square Garden
Performance |
| Timeline |
| Peloton Interactive |
| Madison Square Garden |
Peloton Interactive and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peloton Interactive and Madison Square
The main advantage of trading using opposite Peloton Interactive and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Interactive 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.| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
| Madison Square vs. Madison Square Garden | Madison Square vs. Graham Holdings Co | Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Live Nation Entertainment |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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