Correlation Between Cumulus Media and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and PacifiCorp 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 PacifiCorp 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 PacifiCorp, you can compare the effects of market volatilities on Cumulus Media and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and PacifiCorp.
Diversification Opportunities for Cumulus Media and PacifiCorp
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cumulus and PacifiCorp is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Cumulus Media i.e., Cumulus Media and PacifiCorp go up and down completely randomly.
Pair Corralation between Cumulus Media and PacifiCorp
Given the investment horizon of 90 days Cumulus Media Class is expected to generate 2.33 times more return on investment than PacifiCorp. However, Cumulus Media is 2.33 times more volatile than PacifiCorp. It trades about 0.07 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.07 per unit of risk. If you would invest 75.00 in Cumulus Media Class on September 13, 2024 and sell it today you would earn a total of 4.00 from holding Cumulus Media Class or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. PacifiCorp
Performance |
| Timeline |
| Cumulus Media Class |
| PacifiCorp |
Cumulus Media and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and PacifiCorp
The main advantage of trading using opposite Cumulus Media and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp'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 |
| PacifiCorp vs. Emerson Electric | PacifiCorp vs. Cementos Pacasmayo SAA | PacifiCorp vs. Tyson Foods | PacifiCorp vs. Taiwan Semiconductor Manufacturing |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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