Correlation Between Hershey and Everyman Media
Can any of the company-specific risk be diversified away by investing in both Hershey and Everyman Media 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 Hershey and Everyman Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and Everyman Media Group, you can compare the effects of market volatilities on Hershey and Everyman Media 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 Hershey with a short position of Everyman Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and Everyman Media.
Diversification Opportunities for Hershey and Everyman Media
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hershey and Everyman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and Everyman Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyman Media Group and Hershey 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 Hershey Co are associated (or correlated) with Everyman Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyman Media Group has no effect on the direction of Hershey i.e., Hershey and Everyman Media go up and down completely randomly.
Pair Corralation between Hershey and Everyman Media
Assuming the 90 days trading horizon Hershey Co is expected to generate 0.5 times more return on investment than Everyman Media. However, Hershey Co is 2.02 times less risky than Everyman Media. It trades about -0.43 of its potential returns per unit of risk. Everyman Media Group is currently generating about -0.47 per unit of risk. If you would invest 16,765 in Hershey Co on November 7, 2024 and sell it today you would lose (2,254) from holding Hershey Co or give up 13.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hershey Co vs. Everyman Media Group
Performance |
| Timeline |
| Hershey |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Everyman Media Group |
Hershey and Everyman Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and Everyman Media
The main advantage of trading using opposite Hershey and Everyman Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, Everyman Media 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 Everyman Media will offset losses from the drop in Everyman Media's long position.| Hershey vs. Alien Metals | Hershey vs. Wheaton Precious Metals | Hershey vs. Sovereign Metals | Hershey vs. Cornish Metals |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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