Correlation Between Plby and Madison Square

Can any of the company-specific risk be diversified away by investing in both Plby and Madison Square 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 Plby and Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Plby Group and Madison Square Garden, you can compare the effects of market volatilities on Plby and Madison Square 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 Plby with a short position of Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plby and Madison Square.

Diversification Opportunities for Plby and Madison Square

0.24

Correlation Coefficient

Plby  Madison Square

Modest diversification

The 3 months correlation between Plby and Madison is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Plby Group and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden and Plby 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 Plby Group are associated (or correlated) with Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Plby i.e., Plby and Madison Square go up and down completely randomly.

Pair Corralation between Plby and Madison Square

Given the investment horizon of 90 days Plby Group is expected to generate 3.55 times more return on investment than Madison Square. However, Plby is 3.55 times more volatile than Madison Square Garden. It trades about 0.02 of its potential returns per unit of risk. Madison Square Garden is currently generating about -0.12 per unit of risk. If you would invest  148.00  in Plby Group on December 4, 2024 and sell it today you would lose (3.00) from holding Plby Group or give up 2.03% of portfolio value over 90 days.

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

Plby Group  vs.  Madison Square Garden

Plby Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plby Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Plby may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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

Pair Trading with Plby and Madison Square

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

The idea behind Plby Group and Madison Square Garden 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 Transaction History module to view history of all your transactions and understand their impact on performance.