Correlation Between Entravision Communications and Cross Country
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Cross Country 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 Cross Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Cross Country Healthcare, you can compare the effects of market volatilities on Entravision Communications and Cross Country 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 Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Cross Country.
Diversification Opportunities for Entravision Communications and Cross Country
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Entravision and Cross is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare 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 Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Entravision Communications i.e., Entravision Communications and Cross Country go up and down completely randomly.
Pair Corralation between Entravision Communications and Cross Country
Assuming the 90 days horizon Entravision Communications is expected to generate 19.42 times less return on investment than Cross Country. But when comparing it to its historical volatility, Entravision Communications is 1.04 times less risky than Cross Country. It trades about 0.0 of its potential returns per unit of risk. Cross Country Healthcare is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,020 in Cross Country Healthcare on September 14, 2024 and sell it today you would lose (300.00) from holding Cross Country Healthcare or give up 14.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Entravision Communications vs. Cross Country Healthcare
Performance |
| Timeline |
| Entravision Communications |
| Cross Country Healthcare |
Entravision Communications and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Cross Country
The main advantage of trading using opposite Entravision Communications and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.The idea behind Entravision Communications and Cross Country Healthcare 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.
| Cross Country vs. Robert Half International | Cross Country vs. Insperity | Cross Country vs. ASGN Incorporated | Cross Country vs. ManpowerGroup |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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