Correlation Between Network Media and ESE Entertainment
Can any of the company-specific risk be diversified away by investing in both Network Media and ESE Entertainment 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 Network Media and ESE Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Network Media Group and ESE Entertainment, you can compare the effects of market volatilities on Network Media and ESE Entertainment 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 Network Media with a short position of ESE Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network Media and ESE Entertainment.
Diversification Opportunities for Network Media and ESE Entertainment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Network and ESE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Network Media Group and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment and Network 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 Network Media Group are associated (or correlated) with ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of Network Media i.e., Network Media and ESE Entertainment go up and down completely randomly.
Pair Corralation between Network Media and ESE Entertainment
Assuming the 90 days horizon Network Media Group is expected to generate 0.65 times more return on investment than ESE Entertainment. However, Network Media Group is 1.53 times less risky than ESE Entertainment. It trades about -0.23 of its potential returns per unit of risk. ESE Entertainment is currently generating about -0.19 per unit of risk. If you would invest 12.00 in Network Media Group on September 1, 2024 and sell it today you would lose (2.50) from holding Network Media Group or give up 20.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Network Media Group vs. ESE Entertainment
Performance |
| Timeline |
| Network Media Group |
| ESE Entertainment |
Network Media and ESE Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Network Media and ESE Entertainment
The main advantage of trading using opposite Network Media and ESE Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network Media position performs unexpectedly, ESE Entertainment 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 ESE Entertainment will offset losses from the drop in ESE Entertainment's long position.| Network Media vs. Renoworks Software | Network Media vs. Urbanimmersive | Network Media vs. Pioneering Technology Corp | Network Media vs. Gatekeeper Systems |
| ESE Entertainment vs. Thunderbird Entertainment Group | ESE Entertainment vs. VerticalScope Holdings | ESE Entertainment vs. WildBrain | ESE Entertainment vs. iShares Canadian HYBrid |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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