Correlation Between Warner Bros and SNM Gobal

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

Diversification Opportunities for Warner Bros and SNM Gobal

0.0

Correlation Coefficient

Warner Bros  SNM Gobal

Pay attention - limited upside

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

Pair Corralation between Warner Bros and SNM Gobal

If you would invest  856.00  in Warner Bros Discovery on September 14, 2024 and sell it today you would earn a total of  393.00  from holding Warner Bros Discovery or generate 45.91% return on investment over 90 days.

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

Warner Bros Discovery  vs.  SNM Gobal Holdings

Warner Bros Discovery

Risk-Adjusted Performance

15 of 100

Good

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.

SNM Gobal Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNM Gobal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, SNM Gobal is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Warner Bros and SNM Gobal

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

The idea behind Warner Bros Discovery and SNM Gobal Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.