Correlation Between Media and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both Media and Graham Holdings 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 Media and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Graham Holdings Co, you can compare the effects of market volatilities on Media and Graham Holdings 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 Media with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Graham Holdings.
Diversification Opportunities for Media and Graham Holdings
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Media and Graham is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and 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 Media and Games are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Media i.e., Media and Graham Holdings go up and down completely randomly.
Pair Corralation between Media and Graham Holdings
Assuming the 90 days trading horizon Media and Games is expected to under-perform the Graham Holdings. In addition to that, Media is 1.4 times more volatile than Graham Holdings Co. It trades about -0.11 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about 0.23 per unit of volatility. If you would invest 76,500 in Graham Holdings Co on September 1, 2024 and sell it today you would earn a total of 12,000 from holding Graham Holdings Co or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Media and Games vs. Graham Holdings Co
Performance |
| Timeline |
| Media and Games |
| Graham Holdings |
Media and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Graham Holdings
The main advantage of trading using opposite Media and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.The idea behind Media and Games and Graham Holdings Co 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.| Graham Holdings vs. EAT WELL INVESTMENT | Graham Holdings vs. GRIFFIN MINING LTD | Graham Holdings vs. GREENX METALS LTD | Graham Holdings vs. Zijin Mining Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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