Correlation Between Madison Square and Nikon

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

Diversification Opportunities for Madison Square and Nikon

0.0

Correlation Coefficient

Madison Square  Nikon

Pay attention - limited upside

The 3 months correlation between Madison and Nikon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Nikon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikon 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 Nikon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikon has no effect on the direction of Madison Square i.e., Madison Square and Nikon go up and down completely randomly.

Pair Corralation between Madison Square and Nikon

If you would invest (100.00) in Nikon on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Nikon or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Madison Square Garden  vs.  Nikon

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.

Nikon

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Madison Square and Nikon

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

The idea behind Madison Square Garden and Nikon 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.