Correlation Between Entravision Communications and STELLA JONES

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

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

Diversification Opportunities for Entravision Communications and STELLA JONES

0.71

Correlation Coefficient

Entravision Communications  STELLA JONES

Poor diversification

The 3 months correlation between Entravision and STELLA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and STELLA JONES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELLA JONES INC 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 STELLA JONES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELLA JONES INC has no effect on the direction of Entravision Communications i.e., Entravision Communications and STELLA JONES go up and down completely randomly.

Pair Corralation between Entravision Communications and STELLA JONES

Assuming the 90 days horizon Entravision Communications is expected to generate 2.26 times more return on investment than STELLA JONES. However, Entravision Communications is 2.26 times more volatile than STELLA JONES INC. It trades about 0.12 of its potential returns per unit of risk. STELLA JONES INC is currently generating about 0.18 per unit of risk. If you would invest  158.00  in Entravision Communications on April 24, 2025 and sell it today you would earn a total of  40.00  from holding Entravision Communications or generate 25.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Entravision Communications  vs.  STELLA JONES INC

Entravision Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) 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.

STELLA JONES INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STELLA JONES INC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, STELLA JONES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and STELLA JONES

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

The idea behind Entravision Communications and STELLA JONES INC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.