Correlation Between Entravision Communications and JLT MOBILE

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

By analyzing existing cross correlation between Entravision Communications and JLT MOBILE PUTER, you can compare the effects of market volatilities on Entravision Communications and JLT MOBILE 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 JLT MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and JLT MOBILE.

Diversification Opportunities for Entravision Communications and JLT MOBILE

0.12

Correlation Coefficient

Entravision Communications  JLT MOBILE

Average diversification

The 3 months correlation between Entravision and JLT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and JLT MOBILE PUTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLT MOBILE PUTER 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 JLT MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLT MOBILE PUTER has no effect on the direction of Entravision Communications i.e., Entravision Communications and JLT MOBILE go up and down completely randomly.

Pair Corralation between Entravision Communications and JLT MOBILE

Assuming the 90 days horizon Entravision Communications is expected to generate 10.63 times less return on investment than JLT MOBILE. But when comparing it to its historical volatility, Entravision Communications is 1.34 times less risky than JLT MOBILE. It trades about 0.01 of its potential returns per unit of risk. JLT MOBILE PUTER is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  19.00  in JLT MOBILE PUTER on December 30, 2024 and sell it today you would earn a total of  1.00  from holding JLT MOBILE PUTER or generate 5.26% return on investment over 90 days.

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

Entravision Communications  vs.  JLT MOBILE PUTER

Entravision Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entravision Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Entravision Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

JLT MOBILE PUTER

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JLT MOBILE PUTER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, JLT MOBILE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and JLT MOBILE

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

The idea behind Entravision Communications and JLT MOBILE PUTER 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.