Correlation Between Sony and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Sony 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 Sony and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Entravision Communications, you can compare the effects of market volatilities on Sony 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 Sony with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Entravision Communications.
Diversification Opportunities for Sony and Entravision Communications
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sony and Entravision is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Sony 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 Sony Group 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 Sony i.e., Sony and Entravision Communications go up and down completely randomly.
Pair Corralation between Sony and Entravision Communications
Assuming the 90 days trading horizon Sony Group is expected to generate 0.69 times more return on investment than Entravision Communications. However, Sony Group is 1.44 times less risky than Entravision Communications. It trades about 0.23 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.03 per unit of risk. If you would invest 1,740 in Sony Group on September 13, 2024 and sell it today you would earn a total of 190.00 from holding Sony Group or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. Entravision Communications
Performance |
| Timeline |
| Sony Group |
| Entravision Communications |
Sony and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Entravision Communications
The main advantage of trading using opposite Sony and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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.The idea behind Sony Group and Entravision Communications 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |