Correlation Between Integral and Entravision Communications

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

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

Diversification Opportunities for Integral and Entravision Communications

0.28

Correlation Coefficient

Integral  Entravision Communications

Modest diversification

The 3 months correlation between Integral and Entravision is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Integral 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 Integral Ad Science 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 Integral i.e., Integral and Entravision Communications go up and down completely randomly.

Pair Corralation between Integral and Entravision Communications

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Entravision Communications. But the stock apears to be less risky and, when comparing its historical volatility, Integral Ad Science is 1.09 times less risky than Entravision Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Entravision Communications is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Entravision Communications on September 18, 2024 and sell it today you would earn a total of  49.00  from holding Entravision Communications or generate 24.62% return on investment over 90 days.

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

Integral Ad Science  vs.  Entravision Communications

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Entravision Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 10 (%) 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.

Pair Trading with Integral and Entravision Communications

The main advantage of trading using opposite Integral and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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 Integral Ad Science 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.