Correlation Between Entravision Communications and GLOBAL COSMED

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Can any of the company-specific risk be diversified away by investing in both Entravision Communications and GLOBAL COSMED 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 GLOBAL COSMED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and GLOBAL MED SA, you can compare the effects of market volatilities on Entravision Communications and GLOBAL COSMED 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 GLOBAL COSMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and GLOBAL COSMED.

Diversification Opportunities for Entravision Communications and GLOBAL COSMED

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Entravision and GLOBAL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and GLOBAL MED SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBAL MED SA 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 GLOBAL COSMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBAL MED SA has no effect on the direction of Entravision Communications i.e., Entravision Communications and GLOBAL COSMED go up and down completely randomly.

Pair Corralation between Entravision Communications and GLOBAL COSMED

Assuming the 90 days horizon Entravision Communications is expected to generate 1.01 times less return on investment than GLOBAL COSMED. In addition to that, Entravision Communications is 1.46 times more volatile than GLOBAL MED SA. It trades about 0.09 of its total potential returns per unit of risk. GLOBAL MED SA is currently generating about 0.14 per unit of volatility. If you would invest  103.00  in GLOBAL MED SA on September 2, 2024 and sell it today you would earn a total of  8.00  from holding GLOBAL MED SA or generate 7.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Entravision Communications  vs.  GLOBAL MED SA

 Performance 
       Timeline  
Entravision Communications 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.
GLOBAL MED SA 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GLOBAL MED SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GLOBAL COSMED reported solid returns over the last few months and may actually be approaching a breakup point.

Entravision Communications and GLOBAL COSMED Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Entravision Communications and GLOBAL COSMED

The main advantage of trading using opposite Entravision Communications and GLOBAL COSMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, GLOBAL COSMED 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 GLOBAL COSMED will offset losses from the drop in GLOBAL COSMED's long position.
The idea behind Entravision Communications and GLOBAL MED SA 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.
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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