Correlation Between Entravision Communications and Apollo Medical
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Apollo Medical 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 Apollo Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Apollo Medical Holdings, you can compare the effects of market volatilities on Entravision Communications and Apollo Medical 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 Apollo Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Apollo Medical.
Diversification Opportunities for Entravision Communications and Apollo Medical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Apollo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Apollo Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Medical Holdings 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 Apollo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Medical Holdings has no effect on the direction of Entravision Communications i.e., Entravision Communications and Apollo Medical go up and down completely randomly.
Pair Corralation between Entravision Communications and Apollo Medical
Assuming the 90 days horizon Entravision Communications is expected to generate 1.83 times less return on investment than Apollo Medical. In addition to that, Entravision Communications is 1.73 times more volatile than Apollo Medical Holdings. It trades about 0.07 of its total potential returns per unit of risk. Apollo Medical Holdings is currently generating about 0.23 per unit of volatility. If you would invest 3,580 in Apollo Medical Holdings on August 31, 2024 and sell it today you would earn a total of 420.00 from holding Apollo Medical Holdings or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. Apollo Medical Holdings
Performance |
| Timeline |
| Entravision Communications |
| Apollo Medical Holdings |
Entravision Communications and Apollo Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Apollo Medical
The main advantage of trading using opposite Entravision Communications and Apollo Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Apollo Medical 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 Apollo Medical will offset losses from the drop in Apollo Medical's long position.The idea behind Entravision Communications and Apollo Medical Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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