Correlation Between Entravision Communications and Apple
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Apple Inc, you can compare the effects of market volatilities on Entravision Communications and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Apple.
Diversification Opportunities for Entravision Communications and Apple
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Apple is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Entravision Communications i.e., Entravision Communications and Apple go up and down completely randomly.
Pair Corralation between Entravision Communications and Apple
Assuming the 90 days horizon Entravision Communications is expected to under-perform the Apple. In addition to that, Entravision Communications is 3.47 times more volatile than Apple Inc. It trades about -0.03 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.63 per unit of volatility. If you would invest 20,915 in Apple Inc on September 12, 2024 and sell it today you would earn a total of 2,455 from holding Apple Inc or generate 11.74% 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. Apple Inc
Performance |
| Timeline |
| Entravision Communications |
| Apple Inc |
Entravision Communications and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Apple
The main advantage of trading using opposite Entravision Communications and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Entravision Communications and Apple Inc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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