Correlation Between Warner Bros and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Warner Bros and IHeartMedia 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 IHeartMedia 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 iHeartMedia Class A, you can compare the effects of market volatilities on Warner Bros and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and IHeartMedia.
Diversification Opportunities for Warner Bros and IHeartMedia
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Warner and IHeartMedia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia Class has no effect on the direction of Warner Bros i.e., Warner Bros and IHeartMedia go up and down completely randomly.
Pair Corralation between Warner Bros and IHeartMedia
Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 0.53 times more return on investment than IHeartMedia. However, Warner Bros Discovery is 1.87 times less risky than IHeartMedia. It trades about 0.01 of its potential returns per unit of risk. iHeartMedia Class A is currently generating about -0.01 per unit of risk. If you would invest 1,109 in Warner Bros Discovery on August 30, 2024 and sell it today you would lose (98.00) from holding Warner Bros Discovery or give up 8.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Warner Bros Discovery vs. iHeartMedia Class A
Performance |
| Timeline |
| Warner Bros Discovery |
| iHeartMedia Class |
Warner Bros and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Bros and IHeartMedia
The main advantage of trading using opposite Warner Bros and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia's long position.| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Netflix | Warner Bros vs. Paramount Global Class |
| IHeartMedia vs. Beasley Broadcast Group | IHeartMedia vs. Saga Communications | IHeartMedia vs. E W Scripps | IHeartMedia vs. Gray Television |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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