Correlation Between E W and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both E W and ProSiebenSat1 Media 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 E W and ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E W Scripps and ProSiebenSat1 Media AG, you can compare the effects of market volatilities on E W and ProSiebenSat1 Media 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 E W with a short position of ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of E W and ProSiebenSat1 Media.

Diversification Opportunities for E W and ProSiebenSat1 Media

0.62

Correlation Coefficient

E W  ProSiebenSat1 Media

Poor diversification

The 3 months correlation between SSP and ProSiebenSat1 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding E W Scripps and ProSiebenSat1 Media AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media and E W 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 E W Scripps are associated (or correlated) with ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of E W i.e., E W and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between E W and ProSiebenSat1 Media

Considering the 90-day investment horizon E W Scripps is expected to generate 2.51 times more return on investment than ProSiebenSat1 Media. However, E W is 2.51 times more volatile than ProSiebenSat1 Media AG. It trades about 0.11 of its potential returns per unit of risk. ProSiebenSat1 Media AG is currently generating about 0.03 per unit of risk. If you would invest  179.00  in E W Scripps on September 12, 2024 and sell it today you would earn a total of  65.00  from holding E W Scripps or generate 36.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

E W Scripps  vs.  ProSiebenSat1 Media AG

E W Scripps

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E W Scripps are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, E W reported solid returns over the last few months and may actually be approaching a breakup point.

ProSiebenSat1 Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, ProSiebenSat1 Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with E W and ProSiebenSat1 Media

The main advantage of trading using opposite E W and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E W position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind E W Scripps and ProSiebenSat1 Media AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.