Correlation Between Entravision Communications and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Entravision Communications and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and CDN IMPERIAL.
Diversification Opportunities for Entravision Communications and CDN IMPERIAL
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entravision and CDN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Entravision Communications i.e., Entravision Communications and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Entravision Communications and CDN IMPERIAL
Assuming the 90 days horizon Entravision Communications is expected to generate 4.62 times more return on investment than CDN IMPERIAL. However, Entravision Communications is 4.62 times more volatile than CDN IMPERIAL BANK. It trades about 0.07 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.3 per unit of risk. If you would invest 208.00 in Entravision Communications on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Entravision Communications or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Entravision Communications |
| CDN IMPERIAL BANK |
Entravision Communications and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and CDN IMPERIAL
The main advantage of trading using opposite Entravision Communications and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.The idea behind Entravision Communications and CDN IMPERIAL BANK 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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