Correlation Between Genco Shipping and Entravision Communications

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

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

Diversification Opportunities for Genco Shipping and Entravision Communications

-0.15

Correlation Coefficient

Genco Shipping  Entravision Communications

Good diversification

The 3 months correlation between Genco and Entravision is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Genco Shipping 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 Genco Shipping Trading are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Genco Shipping i.e., Genco Shipping and Entravision Communications go up and down completely randomly.

Pair Corralation between Genco Shipping and Entravision Communications

Assuming the 90 days trading horizon Genco Shipping Trading is expected to generate 0.38 times more return on investment than Entravision Communications. However, Genco Shipping Trading is 2.62 times less risky than Entravision Communications. It trades about 0.1 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.04 per unit of risk. If you would invest  1,308  in Genco Shipping Trading on October 22, 2024 and sell it today you would earn a total of  49.00  from holding Genco Shipping Trading or generate 3.75% return on investment over 90 days.

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

Genco Shipping Trading  vs.  Entravision Communications

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Entravision Communications

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genco Shipping and Entravision Communications

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

The idea behind Genco Shipping Trading and Entravision Communications 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.