Correlation Between Sligro Food and Nexstar Broadcasting

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

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

Diversification Opportunities for Sligro Food and Nexstar Broadcasting

-0.13

Correlation Coefficient

Sligro Food  Nexstar Broadcasting

Good diversification

The 3 months correlation between Sligro and Nexstar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food 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 Sligro Food 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 Sligro Food 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 Sligro Food i.e., Sligro Food and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between Sligro Food and Nexstar Broadcasting

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Nexstar Broadcasting. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 1.34 times less risky than Nexstar Broadcasting. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Nexstar Broadcasting Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15,896  in Nexstar Broadcasting Group on September 12, 2024 and sell it today you would earn a total of  1,019  from holding Nexstar Broadcasting Group or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sligro Food Group  vs.  Nexstar Broadcasting Group

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nexstar Broadcasting

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Broadcasting Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nexstar Broadcasting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sligro Food and Nexstar Broadcasting

The main advantage of trading using opposite Sligro Food and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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 Sligro Food 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.