Correlation Between Emmis Communications and IHeartMedia

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

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

Diversification Opportunities for Emmis Communications and IHeartMedia

-0.16

Correlation Coefficient

Emmis Communications  IHeartMedia

Good diversification

The 3 months correlation between Emmis and IHeartMedia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Emmis Communications Corp and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia and Emmis Communications 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 Emmis Communications Corp are associated (or correlated) with IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia has no effect on the direction of Emmis Communications i.e., Emmis Communications and IHeartMedia go up and down completely randomly.

Pair Corralation between Emmis Communications and IHeartMedia

If you would invest  150.00  in iHeartMedia on September 12, 2024 and sell it today you would earn a total of  65.00  from holding iHeartMedia or generate 43.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Emmis Communications Corp  vs.  iHeartMedia

Emmis Communications Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmis Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Emmis Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iHeartMedia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iHeartMedia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IHeartMedia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emmis Communications and IHeartMedia

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

The idea behind Emmis Communications Corp and iHeartMedia 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.