Correlation Between Emerald Expositions and Gray Television

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

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

Diversification Opportunities for Emerald Expositions and Gray Television

-0.61

Correlation Coefficient

Emerald Expositions  Gray Television

Excellent diversification

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

Pair Corralation between Emerald Expositions and Gray Television

Considering the 90-day investment horizon Emerald Expositions Events is expected to generate 0.88 times more return on investment than Gray Television. However, Emerald Expositions Events is 1.14 times less risky than Gray Television. It trades about 0.01 of its potential returns per unit of risk. Gray Television is currently generating about -0.03 per unit of risk. If you would invest  541.00  in Emerald Expositions Events on September 5, 2024 and sell it today you would lose (43.00) from holding Emerald Expositions Events or give up 7.95% of portfolio value over 90 days.

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

Emerald Expositions Events  vs.  Gray Television

Emerald Expositions

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gray Television

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gray Television has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gray Television is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Emerald Expositions and Gray Television

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

The idea behind Emerald Expositions Events and Gray Television 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.