Correlation Between Entravision Communications and Vestis

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

By analyzing existing cross correlation between Entravision Communications and Vestis, you can compare the effects of market volatilities on Entravision Communications and Vestis 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 Entravision Communications with a short position of Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Vestis.

Diversification Opportunities for Entravision Communications and Vestis

-0.02

Correlation Coefficient

Entravision Communications  Vestis

Good diversification

The 3 months correlation between Entravision and Vestis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and Entravision Communications 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 Entravision Communications are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Entravision Communications i.e., Entravision Communications and Vestis go up and down completely randomly.

Pair Corralation between Entravision Communications and Vestis

Considering the 90-day investment horizon Entravision Communications is expected to generate 1.13 times more return on investment than Vestis. However, Entravision Communications is 1.13 times more volatile than Vestis. It trades about 0.17 of its potential returns per unit of risk. Vestis is currently generating about 0.07 per unit of risk. If you would invest  191.00  in Entravision Communications on September 12, 2024 and sell it today you would earn a total of  65.00  from holding Entravision Communications or generate 34.03% return on investment over 90 days.

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

Entravision Communications  vs.  Vestis

Entravision Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vestis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vestis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Entravision Communications and Vestis

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

The idea behind Entravision Communications and Vestis 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.