Correlation Between Warner Bros and Bolloré SE

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

Diversification Opportunities for Warner Bros and Bolloré SE

-0.42

Correlation Coefficient

Warner Bros  Bolloré SE

Very good diversification

The 3 months correlation between Warner and Bolloré is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Bollor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolloré SE 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 Bolloré SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolloré SE has no effect on the direction of Warner Bros i.e., Warner Bros and Bolloré SE go up and down completely randomly.

Pair Corralation between Warner Bros and Bolloré SE

Considering the 90-day investment horizon Warner Bros is expected to generate 1.11 times less return on investment than Bolloré SE. In addition to that, Warner Bros is 2.07 times more volatile than Bollor SE. It trades about 0.01 of its total potential returns per unit of risk. Bollor SE is currently generating about 0.03 per unit of volatility. If you would invest  534.00  in Bollor SE on September 2, 2024 and sell it today you would earn a total of  85.00  from holding Bollor SE or generate 15.92% return on investment over 90 days.

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

Warner Bros Discovery  vs.  Bollor SE

Warner Bros Discovery

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bolloré SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bollor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bolloré SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Warner Bros and Bolloré SE

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

The idea behind Warner Bros Discovery and Bollor SE 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 Valuation module to check real value of public entities based on technical and fundamental data.