Correlation Between Entravision Communications and Gaming

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

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

Diversification Opportunities for Entravision Communications and Gaming

-0.29

Correlation Coefficient

Entravision Communications  Gaming

Very good diversification

The 3 months correlation between Entravision and Gaming is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Entravision Communications i.e., Entravision Communications and Gaming go up and down completely randomly.

Pair Corralation between Entravision Communications and Gaming

Assuming the 90 days horizon Entravision Communications is expected to generate 1.02 times less return on investment than Gaming. In addition to that, Entravision Communications is 2.23 times more volatile than Gaming and Leisure. It trades about 0.05 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about 0.11 per unit of volatility. If you would invest  4,010  in Gaming and Leisure on April 21, 2025 and sell it today you would earn a total of  103.00  from holding Gaming and Leisure or generate 2.57% 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.  Gaming and Leisure

Entravision Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Gaming and Leisure

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Entravision Communications and Gaming

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

The idea behind Entravision Communications and Gaming and Leisure 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.