Correlation Between Criteo Sa and Entravision Communications

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

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

Diversification Opportunities for Criteo Sa and Entravision Communications

0.64

Correlation Coefficient

Criteo Sa  Entravision Communications

Poor diversification

The 3 months correlation between Criteo and Entravision is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Criteo Sa and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Criteo Sa 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 Criteo Sa 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 Criteo Sa i.e., Criteo Sa and Entravision Communications go up and down completely randomly.

Pair Corralation between Criteo Sa and Entravision Communications

Given the investment horizon of 90 days Criteo Sa is expected to generate 1.94 times more return on investment than Entravision Communications. However, Criteo Sa is 1.94 times more volatile than Entravision Communications. It trades about -0.02 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.26 per unit of risk. If you would invest  3,561  in Criteo Sa on January 31, 2025 and sell it today you would lose (155.00) from holding Criteo Sa or give up 4.35% of portfolio value over 90 days.

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

Criteo Sa  vs.  Entravision Communications

Criteo Sa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Criteo Sa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Entravision Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entravision Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Criteo Sa and Entravision Communications

The main advantage of trading using opposite Criteo Sa and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Criteo Sa 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.

The idea behind Criteo Sa and Entravision Communications 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.