Correlation Between Entravision Communications and Ipsen SA

Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Ipsen SA 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 Entravision Communications and Ipsen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entravision Communications and Ipsen SA, you can compare the effects of market volatilities on Entravision Communications and Ipsen SA 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 Entravision Communications with a short position of Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Ipsen SA.

Diversification Opportunities for Entravision Communications and Ipsen SA

-0.28

Correlation Coefficient

Entravision Communications  Ipsen SA

Very good diversification

The 3 months correlation between Entravision and Ipsen is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA and Entravision Communications 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 Entravision Communications are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of Entravision Communications i.e., Entravision Communications and Ipsen SA go up and down completely randomly.

Pair Corralation between Entravision Communications and Ipsen SA

Assuming the 90 days horizon Entravision Communications is expected to under-perform the Ipsen SA. In addition to that, Entravision Communications is 4.64 times more volatile than Ipsen SA. It trades about -0.01 of its total potential returns per unit of risk. Ipsen SA is currently generating about 0.38 per unit of volatility. If you would invest  10,880  in Ipsen SA on October 27, 2024 and sell it today you would earn a total of  1,070  from holding Ipsen SA or generate 9.83% return on investment over 90 days.

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

Entravision Communications  vs.  Ipsen SA

Entravision Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Ipsen SA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ipsen SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Entravision Communications and Ipsen SA

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

The idea behind Entravision Communications and Ipsen SA 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.