Correlation Between Madison Square and EPlay Digital

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

Diversification Opportunities for Madison Square and EPlay Digital

0.0

Correlation Coefficient

Madison Square  EPlay Digital

Pay attention - limited upside

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

Pair Corralation between Madison Square and EPlay Digital

If you would invest  18,800  in Madison Square Garden on September 3, 2024 and sell it today you would earn a total of  3,000  from holding Madison Square Garden or generate 15.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Madison Square Garden  vs.  ePlay Digital

Madison Square Garden

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Square Garden are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Madison Square reported solid returns over the last few months and may actually be approaching a breakup point.

ePlay Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlay Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EPlay Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Madison Square and EPlay Digital

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

The idea behind Madison Square Garden and ePlay Digital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.