Correlation Between Warner Bros and Fearless Films

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

Diversification Opportunities for Warner Bros and Fearless Films

-0.86

Correlation Coefficient

Warner Bros  Fearless Films

Pay attention - limited upside

The 3 months correlation between Warner and Fearless is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Fearless Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fearless Films 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 Fearless Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fearless Films has no effect on the direction of Warner Bros i.e., Warner Bros and Fearless Films go up and down completely randomly.

Pair Corralation between Warner Bros and Fearless Films

If you would invest  766.00  in Warner Bros Discovery on September 12, 2024 and sell it today you would earn a total of  316.00  from holding Warner Bros Discovery or generate 41.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	29.69%
Values	Daily Returns

Warner Bros Discovery  vs.  Fearless Films

Warner Bros Discovery

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fearless Films

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fearless Films has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fearless Films is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Warner Bros and Fearless Films

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

The idea behind Warner Bros Discovery and Fearless Films 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.