Correlation Between Criteo Sa and Entravision Communications

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Can any of the company-specific risk be diversified away by investing in both Criteo Sa and Entravision 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 Criteo Sa and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Criteo Sa and Entravision Communications, you can compare the effects of market volatilities on Criteo Sa and Entravision 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 Criteo Sa with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Criteo Sa and Entravision Communications.

Diversification Opportunities for Criteo Sa and Entravision Communications

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Criteo and Entravision is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Criteo Sa and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Criteo Sa 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 Criteo Sa are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Criteo Sa i.e., Criteo Sa and Entravision Communications go up and down completely randomly.

Pair Corralation between Criteo Sa and Entravision Communications

Given the investment horizon of 90 days Criteo Sa is expected to generate 0.68 times more return on investment than Entravision Communications. However, Criteo Sa is 1.47 times less risky than Entravision Communications. It trades about 0.42 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.06 per unit of risk. If you would invest  3,654  in Criteo Sa on September 17, 2024 and sell it today you would earn a total of  586.00  from holding Criteo Sa or generate 16.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Criteo Sa  vs.  Entravision Communications

 Performance 
       Timeline  
Criteo Sa 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Criteo Sa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Criteo Sa is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Entravision Communications 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Criteo Sa and Entravision Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Criteo Sa and Entravision Communications

The main advantage of trading using opposite Criteo Sa and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Criteo Sa position performs unexpectedly, Entravision 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.
The idea behind Criteo Sa and Entravision Communications 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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