Correlation Between American Acquisition and International Media
Can any of the company-specific risk be diversified away by investing in both American Acquisition and International 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 American Acquisition and International Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Acquisition Opportunity and International Media Acquisition, you can compare the effects of market volatilities on American Acquisition and International 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 American Acquisition with a short position of International Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Acquisition and International Media.
Diversification Opportunities for American Acquisition and International Media
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and International is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Acquisition Opportuni and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media and American Acquisition 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 American Acquisition Opportunity are associated (or correlated) with International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of American Acquisition i.e., American Acquisition and International Media go up and down completely randomly.
Pair Corralation between American Acquisition and International Media
Assuming the 90 days horizon American Acquisition Opportunity is expected to generate 0.57 times more return on investment than International Media. However, American Acquisition Opportunity is 1.76 times less risky than International Media. It trades about 0.17 of its potential returns per unit of risk. International Media Acquisition is currently generating about 0.08 per unit of risk. If you would invest 2.49 in American Acquisition Opportunity on August 24, 2024 and sell it today you would earn a total of 0.51 from holding American Acquisition Opportunity or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 25.75% |
| Values | Daily Returns |
American Acquisition Opportuni vs. International Media Acquisitio
Performance |
| Timeline |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Acquisition and International Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Acquisition and International Media
The main advantage of trading using opposite American Acquisition and International Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Acquisition position performs unexpectedly, International 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 International Media will offset losses from the drop in International Media's long position.The idea behind American Acquisition Opportunity and International Media Acquisition 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.| International Media vs. SEI Investments | International Media vs. Maiden Holdings | International Media vs. Kinsale Capital Group | International Media vs. The Hanover Insurance |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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