Correlation Between Warner Bros and Saga Communications
Can any of the company-specific risk be diversified away by investing in both Warner Bros and Saga 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 Warner Bros and Saga Communications 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 Saga Communications, you can compare the effects of market volatilities on Warner Bros and Saga 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 Warner Bros with a short position of Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Saga Communications.
Diversification Opportunities for Warner Bros and Saga Communications
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Warner and Saga is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications 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 Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of Warner Bros i.e., Warner Bros and Saga Communications go up and down completely randomly.
Pair Corralation between Warner Bros and Saga Communications
Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 1.61 times more return on investment than Saga Communications. However, Warner Bros is 1.61 times more volatile than Saga Communications. It trades about 0.01 of its potential returns per unit of risk. Saga Communications is currently generating about -0.04 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 Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Warner Bros Discovery vs. Saga Communications
Performance |
| Timeline |
| Warner Bros Discovery |
| Saga Communications |
Warner Bros and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Bros and Saga Communications
The main advantage of trading using opposite Warner Bros and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros position performs unexpectedly, Saga 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 Saga Communications will offset losses from the drop in Saga Communications' long position.| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Netflix | Warner Bros vs. Paramount Global Class |
| Saga Communications vs. News Corp B | Saga Communications vs. News Corp A | Saga Communications vs. Live Nation Entertainment | Saga Communications vs. Paramount Global Class |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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