Correlation Between Hanover House and Movie Studio
Can any of the company-specific risk be diversified away by investing in both Hanover House and Movie Studio 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 Hanover House and Movie Studio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanover House and Movie Studio, you can compare the effects of market volatilities on Hanover House and Movie Studio 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 Hanover House with a short position of Movie Studio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover House and Movie Studio.
Diversification Opportunities for Hanover House and Movie Studio
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hanover and Movie is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hanover House and Movie Studio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movie Studio and Hanover House 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 Hanover House are associated (or correlated) with Movie Studio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movie Studio has no effect on the direction of Hanover House i.e., Hanover House and Movie Studio go up and down completely randomly.
Pair Corralation between Hanover House and Movie Studio
Given the investment horizon of 90 days Hanover House is expected to generate 4.12 times less return on investment than Movie Studio. But when comparing it to its historical volatility, Hanover House is 2.24 times less risky than Movie Studio. It trades about 0.05 of its potential returns per unit of risk. Movie Studio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Movie Studio on August 30, 2024 and sell it today you would lose (0.09) from holding Movie Studio or give up 45.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.55% |
| Values | Daily Returns |
Hanover House vs. Movie Studio
Performance |
| Timeline |
| Hanover House |
| Movie Studio |
Hanover House and Movie Studio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover House and Movie Studio
The main advantage of trading using opposite Hanover House and Movie Studio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover House position performs unexpectedly, Movie Studio 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 Movie Studio will offset losses from the drop in Movie Studio's long position.| Hanover House vs. Warner Music Group | Hanover House vs. Live Nation Entertainment | Hanover House vs. Atlanta Braves Holdings, | Hanover House vs. Warner Bros Discovery |
| Movie Studio vs. Warner Music Group | Movie Studio vs. Live Nation Entertainment | Movie Studio vs. Atlanta Braves Holdings, | Movie Studio vs. Warner Bros Discovery |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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