Correlation Between Reading International and New Wave
Can any of the company-specific risk be diversified away by investing in both Reading International and New Wave 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 Reading International and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reading International and New Wave Holdings, you can compare the effects of market volatilities on Reading International and New Wave 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 Reading International with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reading International and New Wave.
Diversification Opportunities for Reading International and New Wave
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reading and New is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reading International and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Reading International 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 Reading International are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Reading International i.e., Reading International and New Wave go up and down completely randomly.
Pair Corralation between Reading International and New Wave
Considering the 90-day investment horizon Reading International is expected to generate 164.45 times less return on investment than New Wave. But when comparing it to its historical volatility, Reading International is 5.97 times less risky than New Wave. It trades about 0.0 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.59 in New Wave Holdings on November 4, 2024 and sell it today you would lose (2.09) from holding New Wave Holdings or give up 58.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Reading International vs. New Wave Holdings
Performance |
| Timeline |
| Reading International |
| New Wave Holdings |
Reading International and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reading International and New Wave
The main advantage of trading using opposite Reading International and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reading International position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.| Reading International vs. Reservoir Media | Reading International vs. Marcus | Reading International vs. Gaia Inc | Reading International vs. News Corp B |
| New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc | New Wave vs. Guild Esports Plc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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