Correlation Between Imax Corp and Warner Bros

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

By analyzing existing cross correlation between Imax Corp and Warner Bros Discovery, you can compare the effects of market volatilities on Imax Corp and Warner Bros 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 Imax Corp with a short position of Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imax Corp and Warner Bros.

Diversification Opportunities for Imax Corp and Warner Bros

0.5

Correlation Coefficient

Imax Corp  Warner Bros

Very weak diversification

The 3 months correlation between Imax and Warner is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery and Imax Corp 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 Imax Corp are associated (or correlated) with Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Imax Corp i.e., Imax Corp and Warner Bros go up and down completely randomly.

Pair Corralation between Imax Corp and Warner Bros

Given the investment horizon of 90 days Imax Corp is expected to under-perform the Warner Bros. But the stock apears to be less risky and, when comparing its historical volatility, Imax Corp is 1.76 times less risky than Warner Bros. The stock trades about -0.03 of its potential returns per unit of risk. The Warner Bros Discovery is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,056  in Warner Bros Discovery on December 1, 2024 and sell it today you would earn a total of  90.00  from holding Warner Bros Discovery or generate 8.52% return on investment over 90 days.

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

Imax Corp  vs.  Warner Bros Discovery

Imax Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Imax Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Warner Bros Discovery

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Imax Corp and Warner Bros

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

The idea behind Imax Corp and Warner Bros Discovery 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.