Correlation Between International Media and Jaws Mustang
Can any of the company-specific risk be diversified away by investing in both International Media and Jaws Mustang 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 International Media and Jaws Mustang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Media Acquisition and Jaws Mustang Acquisition, you can compare the effects of market volatilities on International Media and Jaws Mustang 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 International Media with a short position of Jaws Mustang. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Media and Jaws Mustang.
Diversification Opportunities for International Media and Jaws Mustang
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Jaws is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Jaws Mustang Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Mustang Acquisition and International Media 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 International Media Acquisition are associated (or correlated) with Jaws Mustang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Mustang Acquisition has no effect on the direction of International Media i.e., International Media and Jaws Mustang go up and down completely randomly.
Pair Corralation between International Media and Jaws Mustang
Assuming the 90 days horizon International Media Acquisition is expected to generate 1261.72 times more return on investment than Jaws Mustang. However, International Media is 1261.72 times more volatile than Jaws Mustang Acquisition. It trades about 0.23 of its potential returns per unit of risk. Jaws Mustang Acquisition is currently generating about 0.08 per unit of risk. If you would invest 1.60 in International Media Acquisition on September 1, 2024 and sell it today you would lose (0.85) from holding International Media Acquisition or give up 53.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.07% |
| Values | Daily Returns |
International Media Acquisitio vs. Jaws Mustang Acquisition
Performance |
| Timeline |
| International Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jaws Mustang Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
International Media and Jaws Mustang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Media and Jaws Mustang
The main advantage of trading using opposite International Media and Jaws Mustang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Media position performs unexpectedly, Jaws Mustang 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 Jaws Mustang will offset losses from the drop in Jaws Mustang's long position.The idea behind International Media Acquisition and Jaws Mustang Acquisition 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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