Correlation Between Entravision Communications and Marubeni

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

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

Diversification Opportunities for Entravision Communications and Marubeni

-0.12

Correlation Coefficient

Entravision Communications  Marubeni

Good diversification

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

Pair Corralation between Entravision Communications and Marubeni

Assuming the 90 days horizon Entravision Communications is expected to generate 1.7 times more return on investment than Marubeni. However, Entravision Communications is 1.7 times more volatile than Marubeni. It trades about 0.19 of its potential returns per unit of risk. Marubeni is currently generating about 0.01 per unit of risk. If you would invest  170.00  in Entravision Communications on September 13, 2024 and sell it today you would earn a total of  68.00  from holding Entravision Communications or generate 40.0% 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.  Marubeni

Entravision Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Marubeni

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Entravision Communications and Marubeni

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

The idea behind Entravision Communications and Marubeni 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.