Correlation Between Nexstar Broadcasting and Delek Logistics

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

By analyzing existing cross correlation between Nexstar Broadcasting Group and Delek Logistics Partners, you can compare the effects of market volatilities on Nexstar Broadcasting and Delek Logistics 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 Nexstar Broadcasting with a short position of Delek Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Delek Logistics.

Diversification Opportunities for Nexstar Broadcasting and Delek Logistics

-0.53

Correlation Coefficient

Nexstar Broadcasting  Delek Logistics

Excellent diversification

The 3 months correlation between Nexstar and Delek is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners and Nexstar Broadcasting 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 Nexstar Broadcasting Group are associated (or correlated) with Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Delek Logistics go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Delek Logistics

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 1.19 times more return on investment than Delek Logistics. However, Nexstar Broadcasting is 1.19 times more volatile than Delek Logistics Partners. It trades about -0.01 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about -0.04 per unit of risk. If you would invest  16,730  in Nexstar Broadcasting Group on September 17, 2024 and sell it today you would lose (355.00) from holding Nexstar Broadcasting Group or give up 2.12% of portfolio value over 90 days.

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

Nexstar Broadcasting Group  vs.  Delek Logistics Partners

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

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

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nexstar Broadcasting and Delek Logistics

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

The idea behind Nexstar Broadcasting Group and Delek Logistics Partners 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.