Correlation Between KAISER and Entravision Communications

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

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

Diversification Opportunities for KAISER and Entravision Communications

-0.13

Correlation Coefficient

KAISER  Entravision Communications

Good diversification

The 3 months correlation between KAISER and Entravision is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding KAISER FOUNDATION HOSPITALS and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and KAISER 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 KAISER FOUNDATION HOSPITALS 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 KAISER i.e., KAISER and Entravision Communications go up and down completely randomly.

Pair Corralation between KAISER and Entravision Communications

Assuming the 90 days trading horizon KAISER FOUNDATION HOSPITALS is expected to generate 0.16 times more return on investment than Entravision Communications. However, KAISER FOUNDATION HOSPITALS is 6.31 times less risky than Entravision Communications. It trades about 0.09 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest  6,907  in KAISER FOUNDATION HOSPITALS on December 25, 2024 and sell it today you would earn a total of  252.00  from holding KAISER FOUNDATION HOSPITALS or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

KAISER FOUNDATION HOSPITALS  vs.  Entravision Communications

KAISER FOUNDATION

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KAISER FOUNDATION HOSPITALS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KAISER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Entravision Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entravision Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Entravision Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KAISER and Entravision Communications

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

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.