Correlation Between NISSIN FOODS and Madison Square

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

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

Diversification Opportunities for NISSIN FOODS and Madison Square

-0.18

Correlation Coefficient

NISSIN FOODS  Madison Square

Good diversification

The 3 months correlation between NISSIN and Madison is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NISSIN FOODS HLDGS 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 NISSIN FOODS 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 NISSIN FOODS HLDGS 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 NISSIN FOODS i.e., NISSIN FOODS and Madison Square go up and down completely randomly.

Pair Corralation between NISSIN FOODS and Madison Square

Assuming the 90 days trading horizon NISSIN FOODS is expected to generate 9.06 times less return on investment than Madison Square. In addition to that, NISSIN FOODS is 1.45 times more volatile than Madison Square Garden. It trades about 0.02 of its total potential returns per unit of risk. Madison Square Garden is currently generating about 0.21 per unit of volatility. If you would invest  18,200  in Madison Square Garden on September 13, 2024 and sell it today you would earn a total of  3,200  from holding Madison Square Garden or generate 17.58% return on investment over 90 days.

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

NISSIN FOODS HLDGS  vs.  Madison Square Garden

NISSIN FOODS HLDGS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NISSIN FOODS HLDGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NISSIN FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Madison Square Garden

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Square Garden are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Madison Square reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSIN FOODS and Madison Square

The main advantage of trading using opposite NISSIN FOODS and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSIN FOODS 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 NISSIN FOODS HLDGS 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.