Correlation Between News and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both News 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 News and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and Entravision Communications, you can compare the effects of market volatilities on News 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 News with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and Entravision Communications.
Diversification Opportunities for News and Entravision Communications
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between News and Entravision is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and News 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 News Corporation 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 News i.e., News and Entravision Communications go up and down completely randomly.
Pair Corralation between News and Entravision Communications
Assuming the 90 days trading horizon News Corporation is expected to generate 0.4 times more return on investment than Entravision Communications. However, News Corporation is 2.52 times less risky than Entravision Communications. It trades about 0.32 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.1 per unit of risk. If you would invest 2,620 in News Corporation on September 1, 2024 and sell it today you would earn a total of 320.00 from holding News Corporation or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
News Corp. vs. Entravision Communications
Performance |
| Timeline |
| News |
| Entravision Communications |
News and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News and Entravision Communications
The main advantage of trading using opposite News and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News 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.| News vs. Ross Stores | News vs. BURLINGTON STORES | News vs. National Retail Properties | News vs. Hyatt Hotels |
| Entravision Communications vs. News Corporation | Entravision Communications vs. RTL Group SA | Entravision Communications vs. Nexstar Media Group | Entravision Communications vs. SES SA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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