Correlation Between Madison Square and Hasbro

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

Diversification Opportunities for Madison Square and Hasbro

-0.17

Correlation Coefficient

Madison Square  Hasbro

Good diversification

The 3 months correlation between Madison and Hasbro is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Madison Square i.e., Madison Square and Hasbro go up and down completely randomly.

Pair Corralation between Madison Square and Hasbro

Given the investment horizon of 90 days Madison Square is expected to generate 13.77 times less return on investment than Hasbro. But when comparing it to its historical volatility, Madison Square Garden is 1.06 times less risky than Hasbro. It trades about 0.01 of its potential returns per unit of risk. Hasbro Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,639  in Hasbro Inc on December 25, 2024 and sell it today you would earn a total of  491.00  from holding Hasbro Inc or generate 8.71% 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.  Hasbro Inc

Madison Square Garden

Risk-Adjusted Performance

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.

Hasbro Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hasbro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Madison Square and Hasbro

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

The idea behind Madison Square Garden and Hasbro 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.