Correlation Between Gray Television and Emmis Communications

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

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

Diversification Opportunities for Gray Television and Emmis Communications

0.18

Correlation Coefficient

Gray Television  Emmis Communications

Average diversification

The 3 months correlation between Gray and Emmis is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and Emmis Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmis Communications Corp and Gray Television 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 Gray Television are associated (or correlated) with Emmis Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmis Communications Corp has no effect on the direction of Gray Television i.e., Gray Television and Emmis Communications go up and down completely randomly.

Pair Corralation between Gray Television and Emmis Communications

If you would invest  390.00  in Emmis Communications Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Emmis Communications Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Gray Television  vs.  Emmis Communications Corp

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 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.

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.

Pair Trading with Gray Television and Emmis Communications

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

The idea behind Gray Television and Emmis Communications Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.