Correlation Between Gray Television and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Gray Television 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 Gray Television and IHeartMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gray Television and iHeartMedia Class A, you can compare the effects of market volatilities on Gray Television 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 Gray Television with a short position of IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gray Television and IHeartMedia.
Diversification Opportunities for Gray Television and IHeartMedia
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gray and IHeartMedia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class and Gray Television 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 Gray Television 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 Gray Television i.e., Gray Television and IHeartMedia go up and down completely randomly.
Pair Corralation between Gray Television and IHeartMedia
Assuming the 90 days horizon Gray Television is expected to generate 4.63 times less return on investment than IHeartMedia. In addition to that, Gray Television is 1.61 times more volatile than iHeartMedia Class A. It trades about 0.03 of its total potential returns per unit of risk. iHeartMedia Class A is currently generating about 0.19 per unit of volatility. If you would invest 189.00 in iHeartMedia Class A on August 27, 2024 and sell it today you would earn a total of 51.00 from holding iHeartMedia Class A or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gray Television vs. iHeartMedia Class A
Performance |
| Timeline |
| Gray Television |
| iHeartMedia Class |
Gray Television and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gray Television and IHeartMedia
The main advantage of trading using opposite Gray Television and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gray Television 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.| Gray Television vs. Liberty Global PLC | Gray Television vs. Gray Television | Gray Television vs. Greif Inc |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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