Correlation Between Emerald Expositions and Alliance Entertainment
Can any of the company-specific risk be diversified away by investing in both Emerald Expositions and Alliance Entertainment 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 Emerald Expositions and Alliance Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerald Expositions Events and Alliance Entertainment Holding, you can compare the effects of market volatilities on Emerald Expositions and Alliance Entertainment 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 Emerald Expositions with a short position of Alliance Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Expositions and Alliance Entertainment.
Diversification Opportunities for Emerald Expositions and Alliance Entertainment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerald and Alliance is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Expositions Events and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment and Emerald Expositions 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 Emerald Expositions Events are associated (or correlated) with Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Emerald Expositions i.e., Emerald Expositions and Alliance Entertainment go up and down completely randomly.
Pair Corralation between Emerald Expositions and Alliance Entertainment
Considering the 90-day investment horizon Emerald Expositions is expected to generate 113.92 times less return on investment than Alliance Entertainment. But when comparing it to its historical volatility, Emerald Expositions Events is 9.25 times less risky than Alliance Entertainment. It trades about 0.02 of its potential returns per unit of risk. Alliance Entertainment Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.62 in Alliance Entertainment Holding on August 27, 2024 and sell it today you would earn a total of 17.38 from holding Alliance Entertainment Holding or generate 2803.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 66.13% |
| Values | Daily Returns |
Emerald Expositions Events vs. Alliance Entertainment Holding
Performance |
| Timeline |
| Emerald Expositions |
| Alliance Entertainment |
Emerald Expositions and Alliance Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerald Expositions and Alliance Entertainment
The main advantage of trading using opposite Emerald Expositions and Alliance Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Expositions position performs unexpectedly, Alliance Entertainment 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 Alliance Entertainment will offset losses from the drop in Alliance Entertainment's long position.| Emerald Expositions vs. Mirriad Advertising plc | Emerald Expositions vs. INEO Tech Corp | Emerald Expositions vs. Innovid Corp | Emerald Expositions vs. Townsquare Media |
| Alliance Entertainment vs. Ainsworth Game Technology | Alliance Entertainment vs. Mesa Air Group | Alliance Entertainment vs. Sun Country Airlines | Alliance Entertainment vs. Zoom Video Communications |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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