Correlation Between Edgewell Personal and Madison Square

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

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

Diversification Opportunities for Edgewell Personal and Madison Square

-0.1

Correlation Coefficient

Edgewell Personal  Madison Square

Good diversification

The 3 months correlation between Edgewell and Madison is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care 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 Edgewell Personal 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 Edgewell Personal Care 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 Edgewell Personal i.e., Edgewell Personal and Madison Square go up and down completely randomly.

Pair Corralation between Edgewell Personal and Madison Square

Considering the 90-day investment horizon Edgewell Personal Care is expected to under-perform the Madison Square. But the stock apears to be less risky and, when comparing its historical volatility, Edgewell Personal Care is 1.08 times less risky than Madison Square. The stock trades about -0.11 of its potential returns per unit of risk. The Madison Square Garden is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,345  in Madison Square Garden on December 26, 2024 and sell it today you would earn a total of  16.00  from holding Madison Square Garden or generate 0.48% return on investment over 90 days.

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

Edgewell Personal Care  vs.  Madison Square Garden

Edgewell Personal Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Madison Square Garden

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Square Garden are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Edgewell Personal and Madison Square

The main advantage of trading using opposite Edgewell Personal and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal 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 Edgewell Personal Care 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 Transaction History module to view history of all your transactions and understand their impact on performance.