Correlation Between Reservoir Media and Gaia
Can any of the company-specific risk be diversified away by investing in both Reservoir Media and Gaia 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 Reservoir Media and Gaia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Gaia Inc, you can compare the effects of market volatilities on Reservoir Media and Gaia 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 Reservoir Media with a short position of Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Gaia.
Diversification Opportunities for Reservoir Media and Gaia
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Reservoir and Gaia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia Inc and Reservoir 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 Reservoir Media are associated (or correlated) with Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of Reservoir Media i.e., Reservoir Media and Gaia go up and down completely randomly.
Pair Corralation between Reservoir Media and Gaia
Given the investment horizon of 90 days Reservoir Media is expected to generate 2.73 times less return on investment than Gaia. But when comparing it to its historical volatility, Reservoir Media is 1.7 times less risky than Gaia. It trades about 0.05 of its potential returns per unit of risk. Gaia Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 228.00 in Gaia Inc on August 27, 2024 and sell it today you would earn a total of 419.00 from holding Gaia Inc or generate 183.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reservoir Media vs. Gaia Inc
Performance |
| Timeline |
| Reservoir Media |
| Gaia Inc |
Reservoir Media and Gaia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Gaia
The main advantage of trading using opposite Reservoir Media and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia's long position.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
| Gaia vs. ADTRAN Inc | Gaia vs. Belden Inc | Gaia vs. ADC Therapeutics SA | Gaia vs. Comtech Telecommunications Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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