Correlation Between Universal Media and Madison Square
Can any of the company-specific risk be diversified away by investing in both Universal Media 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 Universal Media and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Media Group and Madison Square Garden, you can compare the effects of market volatilities on Universal Media 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 Universal Media with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Media and Madison Square.
Diversification Opportunities for Universal Media and Madison Square
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Madison is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Media Group 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 Universal Media 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 Universal Media Group 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 Universal Media i.e., Universal Media and Madison Square go up and down completely randomly.
Pair Corralation between Universal Media and Madison Square
Given the investment horizon of 90 days Universal Media Group is expected to generate 18.69 times more return on investment than Madison Square. However, Universal Media is 18.69 times more volatile than Madison Square Garden. It trades about 0.18 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.12 per unit of risk. If you would invest 2.30 in Universal Media Group on August 27, 2024 and sell it today you would earn a total of 0.70 from holding Universal Media Group or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Media Group vs. Madison Square Garden
Performance |
| Timeline |
| Universal Media Group |
| Madison Square Garden |
Universal Media and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Media and Madison Square
The main advantage of trading using opposite Universal Media and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Media 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.| Universal Media vs. JetBlue Airways Corp | Universal Media vs. Eldorado Gold Corp | Universal Media vs. Sandstorm Gold Ltd | Universal Media vs. Aegean Airlines SA |
| Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Liberty Media | Madison Square vs. Liberty Media | Madison Square 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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