Correlation Between Stagwell and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Entravision Communications, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Entravision Communications.
Diversification Opportunities for Stagwell and Entravision Communications
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stagwell and Entravision is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Entravision Communications go up and down completely randomly.
Pair Corralation between Stagwell and Entravision Communications
Given the investment horizon of 90 days Stagwell is expected to generate 0.77 times more return on investment than Entravision Communications. However, Stagwell is 1.3 times less risky than Entravision Communications. It trades about 0.31 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.12 per unit of risk. If you would invest 643.00 in Stagwell on August 23, 2024 and sell it today you would earn a total of 127.50 from holding Stagwell or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Entravision Communications
Performance |
| Timeline |
| Stagwell |
| Entravision Communications |
Stagwell and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Entravision Communications
The main advantage of trading using opposite Stagwell and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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 Stagwell 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.| Entravision Communications vs. Mirriad Advertising plc | Entravision Communications vs. INEO Tech Corp | Entravision Communications vs. Kidoz Inc | Entravision Communications vs. Marchex |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |