Correlation Between Mediaco Holding and IHeartMedia

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

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

Diversification Opportunities for Mediaco Holding and IHeartMedia

-0.39

Correlation Coefficient

Mediaco Holding  IHeartMedia

Very good diversification

The 3 months correlation between Mediaco and IHeartMedia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mediaco Holding and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia and Mediaco Holding 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 Mediaco Holding 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 Mediaco Holding i.e., Mediaco Holding and IHeartMedia go up and down completely randomly.

Pair Corralation between Mediaco Holding and IHeartMedia

Given the investment horizon of 90 days Mediaco Holding is expected to under-perform the IHeartMedia. In addition to that, Mediaco Holding is 1.36 times more volatile than iHeartMedia. It trades about -0.03 of its total potential returns per unit of risk. iHeartMedia is currently generating about 0.11 per unit of volatility. 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	98.44%
Values	Daily Returns

Mediaco Holding  vs.  iHeartMedia

Mediaco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediaco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Mediaco Holding and IHeartMedia

The main advantage of trading using opposite Mediaco Holding and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediaco Holding 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 Mediaco Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.