Correlation Between American Films and LiveOne
Can any of the company-specific risk be diversified away by investing in both American Films and LiveOne 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 American Films and LiveOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Films and LiveOne, you can compare the effects of market volatilities on American Films and LiveOne 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 American Films with a short position of LiveOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Films and LiveOne.
Diversification Opportunities for American Films and LiveOne
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and LiveOne is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Films and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne and American Films 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 American Films are associated (or correlated) with LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of American Films i.e., American Films and LiveOne go up and down completely randomly.
Pair Corralation between American Films and LiveOne
Given the investment horizon of 90 days American Films is expected to generate 2.92 times more return on investment than LiveOne. However, American Films is 2.92 times more volatile than LiveOne. It trades about 0.05 of its potential returns per unit of risk. LiveOne is currently generating about 0.05 per unit of risk. If you would invest 56.00 in American Films on September 23, 2024 and sell it today you would lose (45.00) from holding American Films or give up 80.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
American Films vs. LiveOne
Performance |
Timeline |
American Films |
LiveOne |
American Films and LiveOne Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Films and LiveOne
The main advantage of trading using opposite American Films and LiveOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Films position performs unexpectedly, LiveOne 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 LiveOne will offset losses from the drop in LiveOne's long position.American Films vs. Roku Inc | American Films vs. Seven Arts Entertainment | American Films vs. All For One | American Films vs. Hall of Fame |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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