Correlation Between Cumulus Media and Marchex

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

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

Diversification Opportunities for Cumulus Media and Marchex

0.45

Correlation Coefficient

Cumulus Media  Marchex

Very weak diversification

The 3 months correlation between Cumulus and Marchex is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Cumulus Media 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 Cumulus Media Class are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Cumulus Media i.e., Cumulus Media and Marchex go up and down completely randomly.

Pair Corralation between Cumulus Media and Marchex

Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Marchex. In addition to that, Cumulus Media is 1.36 times more volatile than Marchex. It trades about -0.14 of its total potential returns per unit of risk. Marchex is currently generating about 0.02 per unit of volatility. If you would invest  177.00  in Marchex on September 4, 2024 and sell it today you would earn a total of  1.00  from holding Marchex or generate 0.56% return on investment over 90 days.

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

Cumulus Media Class  vs.  Marchex

Cumulus Media Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marchex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cumulus Media and Marchex

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

The idea behind Cumulus Media Class and Marchex 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.