Correlation Between Emmis Communications and Gray Television
Can any of the company-specific risk be diversified away by investing in both Emmis Communications 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 Emmis Communications and Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmis Communications Corp and Gray Television, you can compare the effects of market volatilities on Emmis Communications 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 Emmis Communications with a short position of Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmis Communications and Gray Television.
Diversification Opportunities for Emmis Communications and Gray Television
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emmis and Gray is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Emmis Communications Corp and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television and Emmis 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 Emmis Communications Corp 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 Emmis Communications i.e., Emmis Communications and Gray Television go up and down completely randomly.
Pair Corralation between Emmis Communications and Gray Television
Given the investment horizon of 90 days Emmis Communications Corp is expected to generate 1.75 times more return on investment than Gray Television. However, Emmis Communications is 1.75 times more volatile than Gray Television. It trades about 0.12 of its potential returns per unit of risk. Gray Television is currently generating about -0.02 per unit of risk. If you would invest 305.00 in Emmis Communications Corp on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Emmis Communications Corp or generate 27.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.69% |
| Values | Daily Returns |
Emmis Communications Corp vs. Gray Television
Performance |
| Timeline |
| Emmis Communications Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gray Television |
Emmis Communications and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmis Communications and Gray Television
The main advantage of trading using opposite Emmis Communications and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmis Communications 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.| Emmis Communications vs. RTL Group SA | Emmis Communications vs. ITV plc | Emmis Communications vs. ITV PLC ADR | Emmis Communications vs. iHeartMedia |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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