Correlation Between Analog Devices and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Nexstar Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Nexstar Broadcasting Group, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Nexstar Broadcasting.
Diversification Opportunities for Analog Devices and Nexstar Broadcasting
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Analog and Nexstar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between Analog Devices and Nexstar Broadcasting
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Nexstar Broadcasting. In addition to that, Analog Devices is 1.07 times more volatile than Nexstar Broadcasting Group. It trades about -0.01 of its total potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.05 per unit of volatility. If you would invest 14,881 in Nexstar Broadcasting Group on September 13, 2024 and sell it today you would earn a total of 1,704 from holding Nexstar Broadcasting Group or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| Analog Devices |
| Nexstar Broadcasting |
Analog Devices and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Nexstar Broadcasting
The main advantage of trading using opposite Analog Devices and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. ON Semiconductor | Analog Devices vs. Monolithic Power Systems | Analog Devices vs. Globalfoundries | Analog Devices vs. Wisekey International Holding |
| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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