Correlation Between Cumulus Media and RTL Group
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Cumulus Media and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and RTL Group.
Diversification Opportunities for Cumulus Media and RTL Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cumulus and RTL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Cumulus Media i.e., Cumulus Media and RTL Group go up and down completely randomly.
Pair Corralation between Cumulus Media and RTL Group
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the RTL Group. In addition to that, Cumulus Media is 3.11 times more volatile than RTL Group SA. It trades about -0.28 of its total potential returns per unit of risk. RTL Group SA is currently generating about -0.21 per unit of volatility. If you would invest 325.00 in RTL Group SA on August 24, 2024 and sell it today you would lose (28.00) from holding RTL Group SA or give up 8.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cumulus Media Class vs. RTL Group SA
Performance |
| Timeline |
| Cumulus Media Class |
| RTL Group SA |
Cumulus Media and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and RTL Group
The main advantage of trading using opposite Cumulus Media and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group'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 |
| RTL Group vs. ITV PLC ADR | RTL Group vs. iHeartMedia | RTL Group vs. ProSiebenSat1 Media AG | RTL Group vs. TV Azteca SAB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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