Correlation Between Allied Gaming and Warner Bros

Can any of the company-specific risk be diversified away by investing in both Allied Gaming and Warner Bros 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 Allied Gaming and Warner Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allied Gaming Entertainment and Warner Bros Discovery, you can compare the effects of market volatilities on Allied Gaming and Warner Bros 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 Allied Gaming with a short position of Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Gaming and Warner Bros.

Diversification Opportunities for Allied Gaming and Warner Bros

-0.63

Correlation Coefficient

Allied Gaming  Warner Bros

Excellent diversification

The 3 months correlation between Allied and Warner is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery and Allied Gaming 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 Allied Gaming Entertainment are associated (or correlated) with Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Allied Gaming i.e., Allied Gaming and Warner Bros go up and down completely randomly.

Pair Corralation between Allied Gaming and Warner Bros

If you would invest  849.00  in Warner Bros Discovery on September 13, 2024 and sell it today you would earn a total of  233.00  from holding Warner Bros Discovery or generate 27.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Allied Gaming Entertainment  vs.  Warner Bros Discovery

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Allied Gaming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Warner Bros Discovery

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Gaming and Warner Bros

The main advantage of trading using opposite Allied Gaming and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Gaming position performs unexpectedly, Warner Bros 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 Warner Bros will offset losses from the drop in Warner Bros' long position.

The idea behind Allied Gaming Entertainment and Warner Bros Discovery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.