Correlation Between Charter Communications and Saga Communications
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Saga Communications 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 Charter Communications and Saga Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Saga Communications, you can compare the effects of market volatilities on Charter Communications and Saga Communications 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 Charter Communications with a short position of Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Saga Communications.
Diversification Opportunities for Charter Communications and Saga Communications
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Charter and Saga is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications and Charter Communications 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 Charter Communications are associated (or correlated) with Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of Charter Communications i.e., Charter Communications and Saga Communications go up and down completely randomly.
Pair Corralation between Charter Communications and Saga Communications
Given the investment horizon of 90 days Charter Communications is expected to generate 1.18 times more return on investment than Saga Communications. However, Charter Communications is 1.18 times more volatile than Saga Communications. It trades about 0.02 of its potential returns per unit of risk. Saga Communications is currently generating about -0.03 per unit of risk. If you would invest 37,117 in Charter Communications on August 27, 2024 and sell it today you would earn a total of 1,710 from holding Charter Communications or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Saga Communications
Performance |
| Timeline |
| Charter Communications |
| Saga Communications |
Charter Communications and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Saga Communications
The main advantage of trading using opposite Charter Communications and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Saga Communications 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 Saga Communications will offset losses from the drop in Saga Communications' long position.| Charter Communications vs. Liberty Global PLC | Charter Communications vs. Liberty Global PLC | Charter Communications vs. Liberty Broadband Srs | Charter Communications vs. Shenandoah Telecommunications Co |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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