Correlation Between Cumulus Media and Gray Television
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and Gray Television 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 Cumulus Media and Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Gray Television, you can compare the effects of market volatilities on Cumulus Media and Gray Television 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 Cumulus Media with a short position of Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Gray Television.
Diversification Opportunities for Cumulus Media and Gray Television
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cumulus and Gray is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television and Cumulus Media 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 Cumulus Media Class are associated (or correlated) with Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of Cumulus Media i.e., Cumulus Media and Gray Television go up and down completely randomly.
Pair Corralation between Cumulus Media and Gray Television
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Gray Television. But the stock apears to be less risky and, when comparing its historical volatility, Cumulus Media Class is 1.11 times less risky than Gray Television. The stock trades about -0.37 of its potential returns per unit of risk. The Gray Television is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 564.00 in Gray Television on August 27, 2024 and sell it today you would lose (127.00) from holding Gray Television or give up 22.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Gray Television
Performance |
| Timeline |
| Cumulus Media Class |
| Gray Television |
Cumulus Media and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Gray Television
The main advantage of trading using opposite Cumulus Media and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, Gray Television 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 Gray Television will offset losses from the drop in Gray Television's long position.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Gray Television vs. E W Scripps | Gray Television vs. Saga Communications | Gray Television vs. iHeartMedia Class A | Gray Television vs. Cumulus Media Class |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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