Correlation Between Entravision Communications and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Geely Automobile 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 Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Geely Automobile Holdings, you can compare the effects of market volatilities on Entravision Communications and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Geely Automobile.
Diversification Opportunities for Entravision Communications and Geely Automobile
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Geely is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Entravision Communications i.e., Entravision Communications and Geely Automobile go up and down completely randomly.
Pair Corralation between Entravision Communications and Geely Automobile
Assuming the 90 days horizon Entravision Communications is expected to generate 2.29 times more return on investment than Geely Automobile. However, Entravision Communications is 2.29 times more volatile than Geely Automobile Holdings. It trades about -0.07 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.33 per unit of risk. If you would invest 233.00 in Entravision Communications on October 11, 2024 and sell it today you would lose (13.00) from holding Entravision Communications or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Entravision Communications vs. Geely Automobile Holdings
Performance |
| Timeline |
| Entravision Communications |
| Geely Automobile Holdings |
Entravision Communications and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Geely Automobile
The main advantage of trading using opposite Entravision Communications and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Entravision Communications vs. COSMOSTEEL HLDGS | Entravision Communications vs. STEEL DYNAMICS | Entravision Communications vs. Advanced Medical Solutions | Entravision Communications vs. NEW MILLENNIUM IRON |
| Geely Automobile vs. Hemisphere Energy Corp | Geely Automobile vs. Nippon Steel | Geely Automobile vs. Shenandoah Telecommunications | Geely Automobile vs. Liberty Broadband |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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