Correlation Between Screaming Eagle and Senior Connect
Can any of the company-specific risk be diversified away by investing in both Screaming Eagle and Senior Connect 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 Screaming Eagle and Senior Connect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Screaming Eagle Acquisition and Senior Connect Acquisition, you can compare the effects of market volatilities on Screaming Eagle and Senior Connect 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 Screaming Eagle with a short position of Senior Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Screaming Eagle and Senior Connect.
Diversification Opportunities for Screaming Eagle and Senior Connect
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Screaming and Senior is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Screaming Eagle Acquisition and Senior Connect Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senior Connect Acqui and Screaming Eagle 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 Screaming Eagle Acquisition are associated (or correlated) with Senior Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senior Connect Acqui has no effect on the direction of Screaming Eagle i.e., Screaming Eagle and Senior Connect go up and down completely randomly.
Pair Corralation between Screaming Eagle and Senior Connect
Assuming the 90 days horizon Screaming Eagle Acquisition is expected to generate 0.51 times more return on investment than Senior Connect. However, Screaming Eagle Acquisition is 1.95 times less risky than Senior Connect. It trades about 0.01 of its potential returns per unit of risk. Senior Connect Acquisition is currently generating about -0.07 per unit of risk. If you would invest 29.00 in Screaming Eagle Acquisition on August 26, 2024 and sell it today you would lose (14.00) from holding Screaming Eagle Acquisition or give up 48.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 62.14% |
| Values | Daily Returns |
Screaming Eagle Acquisition vs. Senior Connect Acquisition
Performance |
| Timeline |
| Screaming Eagle Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Senior Connect Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Screaming Eagle and Senior Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Screaming Eagle and Senior Connect
The main advantage of trading using opposite Screaming Eagle and Senior Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Screaming Eagle position performs unexpectedly, Senior Connect 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 Senior Connect will offset losses from the drop in Senior Connect's long position.The idea behind Screaming Eagle Acquisition and Senior Connect Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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