Correlation Between Marcus and Warner Bros

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

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

Diversification Opportunities for Marcus and Warner Bros

-0.25

Correlation Coefficient

Marcus  Warner Bros

Very good diversification

The 3 months correlation between Marcus and Warner is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marcus 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 Marcus 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 Marcus 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 Marcus i.e., Marcus and Warner Bros go up and down completely randomly.

Pair Corralation between Marcus and Warner Bros

Considering the 90-day investment horizon Marcus is expected to under-perform the Warner Bros. But the stock apears to be less risky and, when comparing its historical volatility, Marcus is 1.12 times less risky than Warner Bros. The stock trades about -0.13 of its potential returns per unit of risk. The Warner Bros Discovery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,051  in Warner Bros Discovery on December 28, 2024 and sell it today you would earn a total of  52.00  from holding Warner Bros Discovery or generate 4.95% return on investment over 90 days.

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

Marcus  vs.  Warner Bros Discovery

Marcus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 3 (%) 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 Marcus and Warner Bros

The main advantage of trading using opposite Marcus and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcus 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 Marcus 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.