Correlation Between Entravision Communications and Stratasys

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

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

Diversification Opportunities for Entravision Communications and Stratasys

0.73

Correlation Coefficient

Entravision Communications  Stratasys

Poor diversification

The 3 months correlation between Entravision and Stratasys is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Entravision Communications i.e., Entravision Communications and Stratasys go up and down completely randomly.

Pair Corralation between Entravision Communications and Stratasys

Considering the 90-day investment horizon Entravision Communications is expected to generate 0.81 times more return on investment than Stratasys. However, Entravision Communications is 1.23 times less risky than Stratasys. It trades about -0.03 of its potential returns per unit of risk. Stratasys is currently generating about -0.06 per unit of risk. If you would invest  239.00  in Entravision Communications on September 29, 2024 and sell it today you would lose (5.00) from holding Entravision Communications or give up 2.09% 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.  Stratasys

Entravision Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Stratasys

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and Stratasys

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

The idea behind Entravision Communications and Stratasys 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.