Correlation Between Entravision Communications and KINDER

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

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

Diversification Opportunities for Entravision Communications and KINDER

-0.39

Correlation Coefficient

Entravision Communications  KINDER

Very good diversification

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

Pair Corralation between Entravision Communications and KINDER

Considering the 90-day investment horizon Entravision Communications is expected to generate 4.39 times more return on investment than KINDER. However, Entravision Communications is 4.39 times more volatile than KINDER MORGAN ENERGY. It trades about 0.05 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about -0.02 per unit of risk. If you would invest  217.00  in Entravision Communications on October 23, 2024 and sell it today you would earn a total of  19.00  from holding Entravision Communications or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Entravision Communications  vs.  KINDER MORGAN ENERGY

Entravision Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 4 (%) 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.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Entravision Communications and KINDER

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

The idea behind Entravision Communications and KINDER MORGAN ENERGY 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.