Correlation Between Gray Television and Magnite

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

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

Diversification Opportunities for Gray Television and Magnite

-0.75

Correlation Coefficient

Gray Television  Magnite

Pay attention - limited upside

The 3 months correlation between Gray and Magnite is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Gray Television i.e., Gray Television and Magnite go up and down completely randomly.

Pair Corralation between Gray Television and Magnite

Considering the 90-day investment horizon Gray Television is expected to under-perform the Magnite. In addition to that, Gray Television is 1.26 times more volatile than Magnite. It trades about -0.03 of its total potential returns per unit of risk. Magnite is currently generating about 0.1 per unit of volatility. If you would invest  1,379  in Magnite on August 30, 2024 and sell it today you would earn a total of  283.00  from holding Magnite or generate 20.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gray Television  vs.  Magnite

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.

Magnite

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gray Television and Magnite

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

The idea behind Gray Television and Magnite 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.