Correlation Between American Picture and WRIT Media

Can any of the company-specific risk be diversified away by investing in both American Picture and WRIT Media 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 Picture and WRIT Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Picture House and WRIT Media Group, you can compare the effects of market volatilities on American Picture and WRIT Media 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 Picture with a short position of WRIT Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Picture and WRIT Media.

Diversification Opportunities for American Picture and WRIT Media

0.05

Correlation Coefficient

American Picture  WRIT Media

Significant diversification

The 3 months correlation between American and WRIT is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Picture House and WRIT Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WRIT Media Group and American Picture 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 Picture House are associated (or correlated) with WRIT Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WRIT Media Group has no effect on the direction of American Picture i.e., American Picture and WRIT Media go up and down completely randomly.

Pair Corralation between American Picture and WRIT Media

Given the investment horizon of 90 days American Picture is expected to generate 5.39 times less return on investment than WRIT Media. But when comparing it to its historical volatility, American Picture House is 3.99 times less risky than WRIT Media. It trades about 0.05 of its potential returns per unit of risk. WRIT Media Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.28  in WRIT Media Group on October 21, 2024 and sell it today you would lose (0.08) from holding WRIT Media Group or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Picture House  vs.  WRIT Media Group

American Picture House

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, American Picture reported solid returns over the last few months and may actually be approaching a breakup point.

WRIT Media Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WRIT Media Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, WRIT Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Picture and WRIT Media

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

The idea behind American Picture House and WRIT Media Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.