Correlation Between WRIT Media and Maxx Sports

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

By analyzing existing cross correlation between WRIT Media Group and Maxx Sports TV, you can compare the effects of market volatilities on WRIT Media and Maxx Sports 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 WRIT Media with a short position of Maxx Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of WRIT Media and Maxx Sports.

Diversification Opportunities for WRIT Media and Maxx Sports

0.63

Correlation Coefficient

WRIT Media  Maxx Sports

Poor diversification

The 3 months correlation between WRIT and Maxx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WRIT Media Group and Maxx Sports TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxx Sports TV and WRIT Media 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 WRIT Media Group are associated (or correlated) with Maxx Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxx Sports TV has no effect on the direction of WRIT Media i.e., WRIT Media and Maxx Sports go up and down completely randomly.

Pair Corralation between WRIT Media and Maxx Sports

Given the investment horizon of 90 days WRIT Media Group is expected to generate 1.64 times more return on investment than Maxx Sports. However, WRIT Media is 1.64 times more volatile than Maxx Sports TV. It trades about 0.1 of its potential returns per unit of risk. Maxx Sports TV is currently generating about -0.17 per unit of risk. If you would invest  0.30  in WRIT Media Group on September 21, 2024 and sell it today you would earn a total of  0.00  from holding WRIT Media Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

WRIT Media Group  vs.  Maxx Sports TV

WRIT Media Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WRIT Media Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, WRIT Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maxx Sports TV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxx Sports TV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with WRIT Media and Maxx Sports

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

The idea behind WRIT Media Group and Maxx Sports TV 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.