Correlation Between Disney and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Disney and Entravision Communications 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 Disney and Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Entravision Communications, you can compare the effects of market volatilities on Disney and Entravision Communications 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 Disney with a short position of Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Entravision Communications.
Diversification Opportunities for Disney and Entravision Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Disney and Entravision is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Disney 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 Walt Disney are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Disney i.e., Disney and Entravision Communications go up and down completely randomly.
Pair Corralation between Disney and Entravision Communications
Considering the 90-day investment horizon Disney is expected to generate 6.34 times less return on investment than Entravision Communications. But when comparing it to its historical volatility, Walt Disney is 3.04 times less risky than Entravision Communications. It trades about 0.04 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Entravision Communications on June 8, 2025 and sell it today you would earn a total of 32.00 from holding Entravision Communications or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Entravision Communications
Performance |
| Timeline |
| Walt Disney |
| Entravision Communications |
Disney and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Entravision Communications
The main advantage of trading using opposite Disney and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Disney vs. Liberty Media | Disney vs. Warner Music Group | Disney vs. Madison Square Garden | Disney vs. News Corp A |
| Entravision Communications vs. E W Scripps | Entravision Communications vs. Tegna Inc | Entravision Communications vs. iHeartMedia Class A | Entravision Communications vs. Nexstar Broadcasting Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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