Correlation Between BCE and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and Nexstar Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Nexstar Broadcasting Group, you can compare the effects of market volatilities on BCE 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 BCE with a short position of Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Nexstar Broadcasting.
Diversification Opportunities for BCE and Nexstar Broadcasting
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BCE and Nexstar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and BCE 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 BCE Inc 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 BCE i.e., BCE and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between BCE and Nexstar Broadcasting
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Nexstar Broadcasting. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 2.79 times less risky than Nexstar Broadcasting. The stock trades about -0.32 of its potential returns per unit of risk. The Nexstar Broadcasting Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 17,181 in Nexstar Broadcasting Group on September 5, 2024 and sell it today you would lose (140.00) from holding Nexstar Broadcasting Group or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| BCE Inc |
| Nexstar Broadcasting |
BCE and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Nexstar Broadcasting
The main advantage of trading using opposite BCE and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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 BCE Inc 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.| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |