Correlation Between WildBrain and ESE Entertainment
Can any of the company-specific risk be diversified away by investing in both WildBrain and ESE Entertainment 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 WildBrain and ESE Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WildBrain and ESE Entertainment, you can compare the effects of market volatilities on WildBrain and ESE Entertainment 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 WildBrain with a short position of ESE Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of WildBrain and ESE Entertainment.
Diversification Opportunities for WildBrain and ESE Entertainment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WildBrain and ESE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WildBrain and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment and WildBrain 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 WildBrain are associated (or correlated) with ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of WildBrain i.e., WildBrain and ESE Entertainment go up and down completely randomly.
Pair Corralation between WildBrain and ESE Entertainment
Assuming the 90 days trading horizon WildBrain is expected to generate 1.2 times less return on investment than ESE Entertainment. But when comparing it to its historical volatility, WildBrain is 3.16 times less risky than ESE Entertainment. It trades about 0.16 of its potential returns per unit of risk. ESE Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.00 in ESE Entertainment on November 30, 2024 and sell it today you would earn a total of 0.50 from holding ESE Entertainment or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WildBrain vs. ESE Entertainment
Performance |
| Timeline |
| WildBrain |
| ESE Entertainment |
WildBrain and ESE Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WildBrain and ESE Entertainment
The main advantage of trading using opposite WildBrain and ESE Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WildBrain position performs unexpectedly, ESE Entertainment 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 ESE Entertainment will offset losses from the drop in ESE Entertainment's long position.| WildBrain vs. Champion Gaming Group | WildBrain vs. Brookfield Office Properties | WildBrain vs. AKITA Drilling | WildBrain vs. Rogers Communications |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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