Correlation Between Warner Bros and Madison Square
Can any of the company-specific risk be diversified away by investing in both Warner Bros 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 Warner Bros and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Bros Discovery and Madison Square Garden, you can compare the effects of market volatilities on Warner Bros 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 Warner Bros with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Madison Square.
Diversification Opportunities for Warner Bros and Madison Square
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warner and Madison is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery 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 Warner Bros 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 Warner Bros Discovery 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 Warner Bros i.e., Warner Bros and Madison Square go up and down completely randomly.
Pair Corralation between Warner Bros and Madison Square
Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 2.74 times more return on investment than Madison Square. However, Warner Bros is 2.74 times more volatile than Madison Square Garden. It trades about 0.4 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.15 per unit of risk. If you would invest 753.00 in Warner Bros Discovery on August 23, 2024 and sell it today you would earn a total of 270.00 from holding Warner Bros Discovery or generate 35.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Bros Discovery vs. Madison Square Garden
Performance |
| Timeline |
| Warner Bros Discovery |
| Madison Square Garden |
Warner Bros and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Bros and Madison Square
The main advantage of trading using opposite Warner Bros and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros 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.| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Netflix | Warner Bros vs. Paramount Global Class |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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