Correlation Between WildBrain and Corus Entertainment

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

By analyzing existing cross correlation between WildBrain and Corus Entertainment, you can compare the effects of market volatilities on WildBrain and Corus Entertainment 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 WildBrain with a short position of Corus Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of WildBrain and Corus Entertainment.

Diversification Opportunities for WildBrain and Corus Entertainment

0.54

Correlation Coefficient

WildBrain  Corus Entertainment

Very weak diversification

The 3 months correlation between WildBrain and Corus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding WildBrain and Corus Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corus Entertainment and WildBrain 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 WildBrain are associated (or correlated) with Corus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corus Entertainment has no effect on the direction of WildBrain i.e., WildBrain and Corus Entertainment go up and down completely randomly.

Pair Corralation between WildBrain and Corus Entertainment

Assuming the 90 days trading horizon WildBrain is expected to generate 0.7 times more return on investment than Corus Entertainment. However, WildBrain is 1.42 times less risky than Corus Entertainment. It trades about 0.01 of its potential returns per unit of risk. Corus Entertainment is currently generating about -0.12 per unit of risk. If you would invest  108.00  in WildBrain on January 28, 2024 and sell it today you would lose (2.00) from holding WildBrain or give up 1.85% of portfolio value over 90 days.

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

WildBrain  vs.  Corus Entertainment

WildBrain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WildBrain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Corus Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corus Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with WildBrain and Corus Entertainment

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

The idea behind WildBrain and Corus Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.