Correlation Between Nexstar Broadcasting and News Corp

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and News Corp 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 News Corp 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 News Corp B, you can compare the effects of market volatilities on Nexstar Broadcasting and News Corp 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 News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and News Corp.

Diversification Opportunities for Nexstar Broadcasting and News Corp

0.36

Correlation Coefficient

Nexstar Broadcasting  News Corp

Weak diversification

The 3 months correlation between Nexstar and News is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and News Corp B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp B 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp B has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and News Corp go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and News Corp

Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 2.53 times less return on investment than News Corp. In addition to that, Nexstar Broadcasting is 1.9 times more volatile than News Corp B. It trades about 0.04 of its total potential returns per unit of risk. News Corp B is currently generating about 0.19 per unit of volatility. If you would invest  2,788  in News Corp B on August 31, 2024 and sell it today you would earn a total of  384.00  from holding News Corp B or generate 13.77% return on investment over 90 days.

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

Nexstar Broadcasting Group  vs.  News Corp B

Nexstar Broadcasting

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Broadcasting Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

News Corp B

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexstar Broadcasting and News Corp

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

The idea behind Nexstar Broadcasting Group and News Corp B 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 Transaction History module to view history of all your transactions and understand their impact on performance.