Correlation Between Entravision Communications and Fluent

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

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

Diversification Opportunities for Entravision Communications and Fluent

-0.39

Correlation Coefficient

Entravision Communications  Fluent

Very good diversification

The 3 months correlation between Entravision and Fluent is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of Entravision Communications i.e., Entravision Communications and Fluent go up and down completely randomly.

Pair Corralation between Entravision Communications and Fluent

Considering the 90-day investment horizon Entravision Communications is expected to under-perform the Fluent. But the stock apears to be less risky and, when comparing its historical volatility, Entravision Communications is 1.1 times less risky than Fluent. The stock trades about 0.0 of its potential returns per unit of risk. The Fluent Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  343.00  in Fluent Inc on December 2, 2024 and sell it today you would lose (72.00) from holding Fluent Inc or give up 20.99% of portfolio value over 90 days.

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

Entravision Communications  vs.  Fluent Inc

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fluent Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluent Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fluent is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Entravision Communications and Fluent

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

The idea behind Entravision Communications and Fluent Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.