Correlation Between Nexstar Broadcasting and John Wiley

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

Diversification Opportunities for Nexstar Broadcasting and John Wiley

0.36

Correlation Coefficient

Nexstar Broadcasting  John Wiley

Weak diversification

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

Pair Corralation between Nexstar Broadcasting and John Wiley

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 1.15 times more return on investment than John Wiley. However, Nexstar Broadcasting is 1.15 times more volatile than John Wiley Sons. It trades about 0.0 of its potential returns per unit of risk. John Wiley Sons is currently generating about -0.04 per unit of risk. If you would invest  16,089  in Nexstar Broadcasting Group on September 25, 2024 and sell it today you would lose (267.00) from holding Nexstar Broadcasting Group or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.6%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  John Wiley Sons

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wiley Sons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, John Wiley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nexstar Broadcasting and John Wiley

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

The idea behind Nexstar Broadcasting Group and John Wiley Sons 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.