Correlation Between Warner Bros and Big Screen
Can any of the company-specific risk be diversified away by investing in both Warner Bros and Big Screen 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 Warner Bros and Big Screen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Bros Discovery and Big Screen Entertainment, you can compare the effects of market volatilities on Warner Bros and Big Screen 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 Warner Bros with a short position of Big Screen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Big Screen.
Diversification Opportunities for Warner Bros and Big Screen
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warner and Big is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Big Screen Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Screen Entertainment and Warner Bros 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 Warner Bros Discovery are associated (or correlated) with Big Screen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Screen Entertainment has no effect on the direction of Warner Bros i.e., Warner Bros and Big Screen go up and down completely randomly.
Pair Corralation between Warner Bros and Big Screen
Considering the 90-day investment horizon Warner Bros Discovery is expected to under-perform the Big Screen. But the stock apears to be less risky and, when comparing its historical volatility, Warner Bros Discovery is 3.37 times less risky than Big Screen. The stock trades about -0.01 of its potential returns per unit of risk. The Big Screen Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Big Screen Entertainment on September 2, 2024 and sell it today you would lose (1.00) from holding Big Screen Entertainment or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.59% |
| Values | Daily Returns |
Warner Bros Discovery vs. Big Screen Entertainment
Performance |
| Timeline |
| Warner Bros Discovery |
| Big Screen Entertainment |
Warner Bros and Big Screen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Bros and Big Screen
The main advantage of trading using opposite Warner Bros and Big Screen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros position performs unexpectedly, Big Screen 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 Big Screen will offset losses from the drop in Big Screen's long position.| Warner Bros vs. Atari SA | Warner Bros vs. Victory Square Technologies | Warner Bros vs. Motorsport Gaming Us | Warner Bros vs. Alpha Esports Tech |
| Big Screen vs. SNM Gobal Holdings | Big Screen vs. Major League Football | Big Screen vs. Sycamore Entmt Grp | Big Screen vs. AMC Entertainment Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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