Correlation Between Genius Brands and New Wave

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Can any of the company-specific risk be diversified away by investing in both Genius Brands and New Wave 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 Genius Brands and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genius Brands International and New Wave Holdings, you can compare the effects of market volatilities on Genius Brands and New Wave 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 Genius Brands with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genius Brands and New Wave.

Diversification Opportunities for Genius Brands and New Wave

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Genius and New is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Genius Brands International and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Genius Brands 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 Genius Brands International are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Genius Brands i.e., Genius Brands and New Wave go up and down completely randomly.

Pair Corralation between Genius Brands and New Wave

Given the investment horizon of 90 days Genius Brands International is expected to under-perform the New Wave. But the stock apears to be less risky and, when comparing its historical volatility, Genius Brands International is 9.65 times less risky than New Wave. The stock trades about -0.04 of its potential returns per unit of risk. The New Wave Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.47  in New Wave Holdings on September 24, 2024 and sell it today you would earn a total of  0.31  from holding New Wave Holdings or generate 21.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy24.1%
ValuesDaily Returns

Genius Brands International  vs.  New Wave Holdings

 Performance 
       Timeline  
Genius Brands Intern 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Genius Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Genius Brands is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
New Wave Holdings 

Risk-Adjusted Performance

5 of 100

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

Genius Brands and New Wave Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genius Brands and New Wave

The main advantage of trading using opposite Genius Brands and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genius Brands position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.
The idea behind Genius Brands International and New Wave Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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