Correlation Between Entravision Communications and Crown LNG

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

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

Diversification Opportunities for Entravision Communications and Crown LNG

0.6

Correlation Coefficient

Entravision Communications  Crown LNG

Poor diversification

The 3 months correlation between Entravision and Crown is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings 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 Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Entravision Communications i.e., Entravision Communications and Crown LNG go up and down completely randomly.

Pair Corralation between Entravision Communications and Crown LNG

Considering the 90-day investment horizon Entravision Communications is expected to generate 0.36 times more return on investment than Crown LNG. However, Entravision Communications is 2.77 times less risky than Crown LNG. It trades about 0.0 of its potential returns per unit of risk. Crown LNG Holdings is currently generating about 0.0 per unit of risk. If you would invest  227.00  in Entravision Communications on December 29, 2024 and sell it today you would lose (18.00) from holding Entravision Communications or give up 7.93% of portfolio value over 90 days.

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

Entravision Communications  vs.  Crown LNG Holdings

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. In spite of rather sound basic indicators, Entravision Communications is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Crown LNG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown LNG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Crown LNG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Entravision Communications and Crown LNG

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

The idea behind Entravision Communications and Crown LNG Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.