Correlation Between Madison Square and Endeavor Group

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

Diversification Opportunities for Madison Square and Endeavor Group

-0.37

Correlation Coefficient

Madison Square  Endeavor Group

Very good diversification

The 3 months correlation between Madison and Endeavor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and Endeavor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavor Group Holdings 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 Endeavor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavor Group Holdings has no effect on the direction of Madison Square i.e., Madison Square and Endeavor Group go up and down completely randomly.

Pair Corralation between Madison Square and Endeavor Group

Given the investment horizon of 90 days Madison Square Garden is expected to under-perform the Endeavor Group. But the stock apears to be less risky and, when comparing its historical volatility, Madison Square Garden is 1.88 times less risky than Endeavor Group. The stock trades about -0.18 of its potential returns per unit of risk. The Endeavor Group Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,031  in Endeavor Group Holdings on November 28, 2024 and sell it today you would earn a total of  57.00  from holding Endeavor Group Holdings or generate 1.88% 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.  Endeavor Group Holdings

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Endeavor Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavor Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Endeavor Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Madison Square and Endeavor Group

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

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