Correlation Between Entravision Communications and Sony Group
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Sony Group 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 Sony Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Sony Group Corp, you can compare the effects of market volatilities on Entravision Communications and Sony Group 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 Sony Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Sony Group.
Diversification Opportunities for Entravision Communications and Sony Group
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Sony is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group Corp 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Entravision Communications i.e., Entravision Communications and Sony Group go up and down completely randomly.
Pair Corralation between Entravision Communications and Sony Group
Assuming the 90 days horizon Entravision Communications is expected to under-perform the Sony Group. But the stock apears to be less risky and, when comparing its historical volatility, Entravision Communications is 1.84 times less risky than Sony Group. The stock trades about -0.01 of its potential returns per unit of risk. The Sony Group Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Sony Group Corp on September 12, 2024 and sell it today you would earn a total of 1,286 from holding Sony Group Corp or generate 176.16% 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. Sony Group Corp
Performance |
| Timeline |
| Entravision Communications |
| Sony Group Corp |
Entravision Communications and Sony Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Sony Group
The main advantage of trading using opposite Entravision Communications and Sony Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Sony Group 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 Sony Group will offset losses from the drop in Sony Group's long position.The idea behind Entravision Communications and Sony Group Corp 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.
| Sony Group vs. Samsung Electronics Co | Sony Group vs. Samsung Electronics Co | Sony Group vs. Sony Group | Sony Group vs. Superior Plus Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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