Correlation Between Warner Bros and Maxx Sports

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

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

Diversification Opportunities for Warner Bros and Maxx Sports

0.0

Correlation Coefficient

Warner Bros  Maxx Sports

Pay attention - limited upside

The 3 months correlation between Warner and Maxx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Maxx Sports TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxx Sports TV and Warner Bros 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 Warner Bros Discovery are associated (or correlated) with Maxx Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxx Sports TV has no effect on the direction of Warner Bros i.e., Warner Bros and Maxx Sports go up and down completely randomly.

Pair Corralation between Warner Bros and Maxx Sports

If you would invest  1,061  in Warner Bros Discovery on December 27, 2024 and sell it today you would earn a total of  42.00  from holding Warner Bros Discovery or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Warner Bros Discovery  vs.  Maxx Sports TV

Warner Bros Discovery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Warner Bros is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Maxx Sports TV

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Warner Bros and Maxx Sports

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

The idea behind Warner Bros Discovery and Maxx Sports TV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.