Correlation Between Madison Square and Funko

Can any of the company-specific risk be diversified away by investing in both Madison Square and Funko 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 Funko 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 Funko Inc, you can compare the effects of market volatilities on Madison Square and Funko 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 Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Funko.

Diversification Opportunities for Madison Square and Funko

0.78

Correlation Coefficient

Madison Square  Funko

Poor diversification

The 3 months correlation between Madison and Funko is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Madison Square i.e., Madison Square and Funko go up and down completely randomly.

Pair Corralation between Madison Square and Funko

Given the investment horizon of 90 days Madison Square Garden is expected to generate 0.54 times more return on investment than Funko. However, Madison Square Garden is 1.86 times less risky than Funko. It trades about -0.05 of its potential returns per unit of risk. Funko Inc is currently generating about -0.3 per unit of risk. If you would invest  3,583  in Madison Square Garden on December 29, 2024 and sell it today you would lose (212.00) from holding Madison Square Garden or give up 5.92% of portfolio value over 90 days.

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

Madison Square Garden  vs.  Funko Inc

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.

Funko Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Funko Inc 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 forward-looking signals 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.

Pair Trading with Madison Square and Funko

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

The idea behind Madison Square Garden and Funko Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.