Correlation Between Sinclair Broadcast and Nexstar Broadcasting

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

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

Diversification Opportunities for Sinclair Broadcast and Nexstar Broadcasting

0.4

Correlation Coefficient

Sinclair Broadcast  Nexstar Broadcasting

Very weak diversification

The 3 months correlation between Sinclair and Nexstar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and Sinclair Broadcast 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 Sinclair Broadcast Group are associated (or correlated) with Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Sinclair Broadcast i.e., Sinclair Broadcast and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and Nexstar Broadcasting

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to generate 1.12 times more return on investment than Nexstar Broadcasting. However, Sinclair Broadcast is 1.12 times more volatile than Nexstar Broadcasting Group. It trades about 0.1 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about -0.01 per unit of risk. If you would invest  1,418  in Sinclair Broadcast Group on September 22, 2024 and sell it today you would earn a total of  195.00  from holding Sinclair Broadcast Group or generate 13.75% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  Nexstar Broadcasting Group

Sinclair Broadcast

Risk-Adjusted Performance

7 of 100

OK

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

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.

Pair Trading with Sinclair Broadcast and Nexstar Broadcasting

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

The idea behind Sinclair Broadcast Group and Nexstar Broadcasting Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.