Correlation Between Imax Corp and Sinclair Broadcast

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

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

Diversification Opportunities for Imax Corp and Sinclair Broadcast

-0.61

Correlation Coefficient

Imax Corp  Sinclair Broadcast

Excellent diversification

The 3 months correlation between Imax and Sinclair is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and Sinclair Broadcast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinclair Broadcast and Imax Corp 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 Imax Corp are associated (or correlated) with Sinclair Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinclair Broadcast has no effect on the direction of Imax Corp i.e., Imax Corp and Sinclair Broadcast go up and down completely randomly.

Pair Corralation between Imax Corp and Sinclair Broadcast

Given the investment horizon of 90 days Imax Corp is expected to generate 2.26 times less return on investment than Sinclair Broadcast. But when comparing it to its historical volatility, Imax Corp is 1.31 times less risky than Sinclair Broadcast. It trades about 0.08 of its potential returns per unit of risk. Sinclair Broadcast Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,247  in Sinclair Broadcast Group on February 8, 2024 and sell it today you would earn a total of  86.00  from holding Sinclair Broadcast Group or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Imax Corp  vs.  Sinclair Broadcast Group

Imax Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imax Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Imax Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Sinclair Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinclair Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Sinclair Broadcast is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Imax Corp and Sinclair Broadcast

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

The idea behind Imax Corp and Sinclair Broadcast Group 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.

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 Stocks Directory module to find actively traded stocks across global markets.