Correlation Between Entravision Communications and Axonics
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Axonics 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 Entravision Communications and Axonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Axonics, you can compare the effects of market volatilities on Entravision Communications and Axonics 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 Entravision Communications with a short position of Axonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Axonics.
Diversification Opportunities for Entravision Communications and Axonics
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Axonics is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Axonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics and Entravision Communications 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 Entravision Communications are associated (or correlated) with Axonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics has no effect on the direction of Entravision Communications i.e., Entravision Communications and Axonics go up and down completely randomly.
Pair Corralation between Entravision Communications and Axonics
Assuming the 90 days horizon Entravision Communications is expected to generate 1.36 times more return on investment than Axonics. However, Entravision Communications is 1.36 times more volatile than Axonics. It trades about 0.15 of its potential returns per unit of risk. Axonics is currently generating about 0.09 per unit of risk. If you would invest 171.00 in Entravision Communications on September 12, 2024 and sell it today you would earn a total of 51.00 from holding Entravision Communications or generate 29.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Entravision Communications vs. Axonics
Performance |
| Timeline |
| Entravision Communications |
| Axonics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Entravision Communications and Axonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Axonics
The main advantage of trading using opposite Entravision Communications and Axonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Axonics 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 Axonics will offset losses from the drop in Axonics' long position.The idea behind Entravision Communications and Axonics 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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