Correlation Between Sycamore Entmt and Warner Bros

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

By analyzing existing cross correlation between Sycamore Entmt Grp and Warner Bros Discovery, you can compare the effects of market volatilities on Sycamore Entmt and Warner Bros 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 Sycamore Entmt with a short position of Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sycamore Entmt and Warner Bros.

Diversification Opportunities for Sycamore Entmt and Warner Bros

0.4

Correlation Coefficient

Sycamore Entmt  Warner Bros

Very weak diversification

The 3 months correlation between Sycamore and Warner is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sycamore Entmt Grp and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery and Sycamore Entmt 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 Sycamore Entmt Grp are associated (or correlated) with Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Sycamore Entmt i.e., Sycamore Entmt and Warner Bros go up and down completely randomly.

Pair Corralation between Sycamore Entmt and Warner Bros

Given the investment horizon of 90 days Sycamore Entmt Grp is expected to generate 4.24 times more return on investment than Warner Bros. However, Sycamore Entmt is 4.24 times more volatile than Warner Bros Discovery. It trades about 0.14 of its potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.13 per unit of risk. If you would invest  0.05  in Sycamore Entmt Grp on September 30, 2024 and sell it today you would earn a total of  0.05  from holding Sycamore Entmt Grp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Sycamore Entmt Grp  vs.  Warner Bros Discovery

Sycamore Entmt Grp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sycamore Entmt Grp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Sycamore Entmt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Warner Bros Discovery

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sycamore Entmt and Warner Bros

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

The idea behind Sycamore Entmt Grp and Warner Bros Discovery 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.