Correlation Between Marfrig Global and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Entravision Communications 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 Marfrig Global and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Entravision Communications, you can compare the effects of market volatilities on Marfrig Global and Entravision Communications 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 Marfrig Global with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Entravision Communications.
Diversification Opportunities for Marfrig Global and Entravision Communications
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and Entravision is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Marfrig Global i.e., Marfrig Global and Entravision Communications go up and down completely randomly.
Pair Corralation between Marfrig Global and Entravision Communications
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.86 times more return on investment than Entravision Communications. However, Marfrig Global Foods is 1.16 times less risky than Entravision Communications. It trades about 0.07 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest 125.00 in Marfrig Global Foods on September 5, 2024 and sell it today you would earn a total of 183.00 from holding Marfrig Global Foods or generate 146.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Marfrig Global Foods vs. Entravision Communications
Performance |
| Timeline |
| Marfrig Global Foods |
| Entravision Communications |
Marfrig Global and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Entravision Communications
The main advantage of trading using opposite Marfrig Global and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods Corp |
| Entravision Communications vs. Marchex | Entravision Communications vs. Direct Digital Holdings | Entravision Communications vs. Cimpress NV | Entravision Communications vs. Townsquare Media |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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