Correlation Between Movie Studio and Hanover House
Can any of the company-specific risk be diversified away by investing in both Movie Studio and Hanover House 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 Movie Studio and Hanover House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movie Studio and Hanover House, you can compare the effects of market volatilities on Movie Studio and Hanover House 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 Movie Studio with a short position of Hanover House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movie Studio and Hanover House.
Diversification Opportunities for Movie Studio and Hanover House
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Movie and Hanover is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Movie Studio and Hanover House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover House and Movie Studio 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 Movie Studio are associated (or correlated) with Hanover House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover House has no effect on the direction of Movie Studio i.e., Movie Studio and Hanover House go up and down completely randomly.
Pair Corralation between Movie Studio and Hanover House
Given the investment horizon of 90 days Movie Studio is expected to generate 2.24 times more return on investment than Hanover House. However, Movie Studio is 2.24 times more volatile than Hanover House. It trades about 0.1 of its potential returns per unit of risk. Hanover House is currently generating about 0.05 per unit of risk. 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 |
Movie Studio vs. Hanover House
Performance |
| Timeline |
| Movie Studio |
| Hanover House |
Movie Studio and Hanover House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movie Studio and Hanover House
The main advantage of trading using opposite Movie Studio and Hanover House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movie Studio position performs unexpectedly, Hanover House 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 Hanover House will offset losses from the drop in Hanover House's long position.| Movie Studio vs. Warner Music Group | Movie Studio vs. Live Nation Entertainment | Movie Studio vs. Atlanta Braves Holdings, | Movie Studio vs. Warner Bros Discovery |
| Hanover House vs. Warner Music Group | Hanover House vs. Live Nation Entertainment | Hanover House vs. Atlanta Braves Holdings, | Hanover House 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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