Correlation Between Spring Valley and Entravision Communications

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

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

Diversification Opportunities for Spring Valley and Entravision Communications

0.73

Correlation Coefficient

Spring Valley  Entravision Communications

Poor diversification

The 3 months correlation between Spring and Entravision is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and Entravision Communications go up and down completely randomly.

Pair Corralation between Spring Valley and Entravision Communications

Assuming the 90 days horizon Spring Valley Acquisition is expected to generate 5.31 times more return on investment than Entravision Communications. However, Spring Valley is 5.31 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 0.03 per unit of risk. If you would invest  15.00  in Spring Valley Acquisition on April 27, 2025 and sell it today you would lose (1.00) from holding Spring Valley Acquisition or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	63.64%
Values	Daily Returns

Spring Valley Acquisition  vs.  Entravision Communications

Spring Valley Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward indicators, Spring Valley reported solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spring Valley and Entravision Communications

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

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.