Correlation Between Fox Corp and Madison Square

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

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

Diversification Opportunities for Fox Corp and Madison Square

0.82

Correlation Coefficient

Fox Corp  Madison Square

Very poor diversification

The 3 months correlation between Fox and Madison is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fox Corp Class 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 Fox Corp 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 Fox Corp Class 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 Fox Corp i.e., Fox Corp and Madison Square go up and down completely randomly.

Pair Corralation between Fox Corp and Madison Square

Considering the 90-day investment horizon Fox Corp Class is expected to generate 1.32 times more return on investment than Madison Square. However, Fox Corp is 1.32 times more volatile than Madison Square Garden. It trades about 0.19 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.18 per unit of risk. If you would invest  3,819  in Fox Corp Class on September 4, 2024 and sell it today you would earn a total of  622.00  from holding Fox Corp Class or generate 16.29% return on investment over 90 days.

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

Fox Corp Class  vs.  Madison Square Garden

Fox Corp Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Corp Class are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fox Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Madison Square Garden

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Square Garden are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Madison Square may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fox Corp and Madison Square

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.