Correlation Between Madison Square and Canlan Ice

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

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

Diversification Opportunities for Madison Square and Canlan Ice

-0.2

Correlation Coefficient

Madison Square  Canlan Ice

Good diversification

The 3 months correlation between Madison and Canlan is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Madison Square 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 Madison Square Garden are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Madison Square i.e., Madison Square and Canlan Ice go up and down completely randomly.

Pair Corralation between Madison Square and Canlan Ice

Given the investment horizon of 90 days Madison Square is expected to generate 3.86 times less return on investment than Canlan Ice. In addition to that, Madison Square is 17.57 times more volatile than Canlan Ice Sports. It trades about 0.0 of its total potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.12 per unit of volatility. If you would invest  292.00  in Canlan Ice Sports on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Canlan Ice Sports or generate 1.71% return on investment over 90 days.

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

Madison Square Garden  vs.  Canlan Ice Sports

Madison Square Garden

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Canlan Ice Sports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canlan Ice Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Madison Square and Canlan Ice

The main advantage of trading using opposite Madison Square and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.

The idea behind Madison Square Garden and Canlan Ice Sports 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.