Correlation Between Warner Bros and Brera Holdings

Can any of the company-specific risk be diversified away by investing in both Warner Bros and Brera Holdings 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 Brera Holdings 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 Brera Holdings PLC, you can compare the effects of market volatilities on Warner Bros and Brera Holdings 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 Brera Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Brera Holdings.

Diversification Opportunities for Warner Bros and Brera Holdings

-0.14

Correlation Coefficient

Warner Bros  Brera Holdings

Good diversification

The 3 months correlation between Warner and Brera is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Brera Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brera Holdings PLC 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 Brera Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brera Holdings PLC has no effect on the direction of Warner Bros i.e., Warner Bros and Brera Holdings go up and down completely randomly.

Pair Corralation between Warner Bros and Brera Holdings

Considering the 90-day investment horizon Warner Bros is expected to generate 2.63 times less return on investment than Brera Holdings. But when comparing it to its historical volatility, Warner Bros Discovery is 3.49 times less risky than Brera Holdings. It trades about 0.04 of its potential returns per unit of risk. Brera Holdings PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Brera Holdings PLC on December 28, 2024 and sell it today you would lose (3.00) from holding Brera Holdings PLC or give up 4.05% of portfolio value over 90 days.

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

Warner Bros Discovery  vs.  Brera Holdings PLC

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.

Brera Holdings PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brera Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Brera Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Warner Bros and Brera Holdings

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

The idea behind Warner Bros Discovery and Brera Holdings PLC 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.