Correlation Between Entravision Communications and Gap,

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

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

Diversification Opportunities for Entravision Communications and Gap,

0.28

Correlation Coefficient

Entravision Communications  Gap,

Modest diversification

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

Pair Corralation between Entravision Communications and Gap,

Considering the 90-day investment horizon Entravision Communications is expected to under-perform the Gap,. In addition to that, Entravision Communications is 1.15 times more volatile than The Gap,. It trades about -0.03 of its total potential returns per unit of risk. The Gap, is currently generating about 0.05 per unit of volatility. If you would invest  1,345  in The Gap, on October 26, 2024 and sell it today you would earn a total of  1,124  from holding The Gap, or generate 83.57% return on investment over 90 days.

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

Entravision Communications  vs.  The Gap,

Entravision Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gap,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and Gap,

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

The idea behind Entravision Communications and The Gap, 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.