Correlation Between American Picture and Dave Busters
Can any of the company-specific risk be diversified away by investing in both American Picture and Dave Busters 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 Picture and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Picture House and Dave Busters Entertainment, you can compare the effects of market volatilities on American Picture and Dave Busters 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 Picture with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Picture and Dave Busters.
Diversification Opportunities for American Picture and Dave Busters
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Dave is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Picture House and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and American Picture 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 Picture House are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of American Picture i.e., American Picture and Dave Busters go up and down completely randomly.
Pair Corralation between American Picture and Dave Busters
Given the investment horizon of 90 days American Picture House is expected to generate 3.5 times more return on investment than Dave Busters. However, American Picture is 3.5 times more volatile than Dave Busters Entertainment. It trades about 0.05 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.01 per unit of risk. If you would invest 30.00 in American Picture House on August 26, 2024 and sell it today you would lose (1.00) from holding American Picture House or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Picture House vs. Dave Busters Entertainment
Performance |
| Timeline |
| American Picture House |
| Dave Busters Enterta |
American Picture and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Picture and Dave Busters
The main advantage of trading using opposite American Picture and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Picture position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.The idea behind American Picture House and Dave Busters Entertainment 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.| Dave Busters vs. Imax Corp | Dave Busters vs. Marcus | Dave Busters vs. AMC Networks | Dave Busters vs. Cinemark Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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