Correlation Between Warner Bros and IQIYI
Can any of the company-specific risk be diversified away by investing in both Warner Bros and IQIYI 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 IQIYI 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 iQIYI Inc, you can compare the effects of market volatilities on Warner Bros and IQIYI 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 IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and IQIYI.
Diversification Opportunities for Warner Bros and IQIYI
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warner and IQIYI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc 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 IQIYI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iQIYI Inc has no effect on the direction of Warner Bros i.e., Warner Bros and IQIYI go up and down completely randomly.
Pair Corralation between Warner Bros and IQIYI
Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 1.0 times more return on investment than IQIYI. However, Warner Bros is 1.0 times more volatile than iQIYI Inc. It trades about 0.44 of its potential returns per unit of risk. iQIYI Inc is currently generating about -0.38 per unit of risk. If you would invest 761.00 in Warner Bros Discovery on August 28, 2024 and sell it today you would earn a total of 279.00 from holding Warner Bros Discovery or generate 36.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Bros Discovery vs. iQIYI Inc
Performance |
| Timeline |
| Warner Bros Discovery |
| iQIYI Inc |
Warner Bros and IQIYI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Bros and IQIYI
The main advantage of trading using opposite Warner Bros and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros position performs unexpectedly, IQIYI 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 IQIYI will offset losses from the drop in IQIYI'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 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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