Correlation Between Warner Bros and Marcus

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

Diversification Opportunities for Warner Bros and Marcus

0.28

Correlation Coefficient

Warner Bros  Marcus

Modest diversification

The 3 months correlation between Warner and Marcus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus 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 Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Warner Bros i.e., Warner Bros and Marcus go up and down completely randomly.

Pair Corralation between Warner Bros and Marcus

Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 1.99 times more return on investment than Marcus. However, Warner Bros is 1.99 times more volatile than Marcus. It trades about 0.03 of its potential returns per unit of risk. Marcus is currently generating about -0.08 per unit of risk. If you would invest  1,048  in Warner Bros Discovery on November 29, 2024 and sell it today you would earn a total of  21.00  from holding Warner Bros Discovery or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Warner Bros Discovery  vs.  Marcus

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.

Marcus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Warner Bros and Marcus

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

The idea behind Warner Bros Discovery and Marcus 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.