Correlation Between Madison Square and Nexxen International

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

Diversification Opportunities for Madison Square and Nexxen International

-0.76

Correlation Coefficient

Madison Square  Nexxen International

Pay attention - limited upside

The 3 months correlation between Madison and Nexxen is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Madison Square i.e., Madison Square and Nexxen International go up and down completely randomly.

Pair Corralation between Madison Square and Nexxen International

Given the investment horizon of 90 days Madison Square Garden is expected to under-perform the Nexxen International. But the stock apears to be less risky and, when comparing its historical volatility, Madison Square Garden is 1.64 times less risky than Nexxen International. The stock trades about 0.0 of its potential returns per unit of risk. The Nexxen International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Nexxen International on October 9, 2024 and sell it today you would earn a total of  504.00  from holding Nexxen International or generate 88.42% return on investment over 90 days.

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

Madison Square Garden  vs.  Nexxen International

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nexxen International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Madison Square and Nexxen International

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

The idea behind Madison Square Garden and Nexxen International 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.