Correlation Between Cable One and Madison Square

Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cable One and Madison Square Garden, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Madison Square.

Diversification Opportunities for Cable One and Madison Square

-0.02

Correlation Coefficient

Cable One  Madison Square

Good diversification

The 3 months correlation between Cable and Madison is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cable One 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 Cable One 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 Cable One 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 Cable One i.e., Cable One and Madison Square go up and down completely randomly.

Pair Corralation between Cable One and Madison Square

Given the investment horizon of 90 days Cable One is expected to under-perform the Madison Square. In addition to that, Cable One is 1.46 times more volatile than Madison Square Garden. It trades about -0.07 of its total potential returns per unit of risk. Madison Square Garden is currently generating about 0.02 per unit of volatility. If you would invest  3,232  in Madison Square Garden on December 2, 2024 and sell it today you would earn a total of  221.00  from holding Madison Square Garden or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cable One  vs.  Madison Square Garden

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Madison Square Garden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Square Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Madison Square is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cable One and Madison Square

The main advantage of trading using opposite Cable One and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.

The idea behind Cable One and Madison Square Garden pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.