Correlation Between Cumulus Media and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and IHeartMedia 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 IHeartMedia 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 iHeartMedia Class A, you can compare the effects of market volatilities on Cumulus Media and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and IHeartMedia.
Diversification Opportunities for Cumulus Media and IHeartMedia
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cumulus and IHeartMedia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia Class has no effect on the direction of Cumulus Media i.e., Cumulus Media and IHeartMedia go up and down completely randomly.
Pair Corralation between Cumulus Media and IHeartMedia
Given the investment horizon of 90 days Cumulus Media is expected to generate 1.6 times less return on investment than IHeartMedia. In addition to that, Cumulus Media is 1.35 times more volatile than iHeartMedia Class A. It trades about 0.13 of its total potential returns per unit of risk. iHeartMedia Class A is currently generating about 0.29 per unit of volatility. If you would invest 192.00 in iHeartMedia Class A on October 23, 2024 and sell it today you would earn a total of 44.00 from holding iHeartMedia Class A or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. iHeartMedia Class A
Performance |
| Timeline |
| Cumulus Media Class |
| iHeartMedia Class |
Cumulus Media and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and IHeartMedia
The main advantage of trading using opposite Cumulus Media and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia'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 |
| IHeartMedia vs. Beasley Broadcast Group | IHeartMedia vs. Saga Communications | IHeartMedia vs. E W Scripps | IHeartMedia vs. Gray Television |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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