Correlation Between Axfood AB and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Entravision Communications 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 Axfood AB and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Entravision Communications, you can compare the effects of market volatilities on Axfood AB and Entravision Communications 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 Axfood AB with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Entravision Communications.
Diversification Opportunities for Axfood AB and Entravision Communications
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axfood and Entravision is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Axfood AB 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 Axfood AB are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Axfood AB i.e., Axfood AB and Entravision Communications go up and down completely randomly.
Pair Corralation between Axfood AB and Entravision Communications
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Entravision Communications. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 2.13 times less risky than Entravision Communications. The stock trades about -0.03 of its potential returns per unit of risk. The Entravision Communications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Entravision Communications on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Entravision Communications or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Axfood AB vs. Entravision Communications
Performance |
| Timeline |
| Axfood AB |
| Entravision Communications |
Axfood AB and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Entravision Communications
The main advantage of trading using opposite Axfood AB and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Axfood AB vs. Avanos Medical | Axfood AB vs. Collins Foods Limited | Axfood AB vs. LIFEWAY FOODS | Axfood AB vs. SENECA FOODS A |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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