Correlation Between IHeartMedia and Saga Communications
Can any of the company-specific risk be diversified away by investing in both IHeartMedia and Saga Communications 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 IHeartMedia and Saga Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iHeartMedia and Saga Communications, you can compare the effects of market volatilities on IHeartMedia and Saga Communications 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 IHeartMedia with a short position of Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHeartMedia and Saga Communications.
Diversification Opportunities for IHeartMedia and Saga Communications
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between IHeartMedia and Saga is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding iHeartMedia and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications and IHeartMedia 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 iHeartMedia are associated (or correlated) with Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of IHeartMedia i.e., IHeartMedia and Saga Communications go up and down completely randomly.
Pair Corralation between IHeartMedia and Saga Communications
Assuming the 90 days horizon iHeartMedia is expected to generate 2.82 times more return on investment than Saga Communications. However, IHeartMedia is 2.82 times more volatile than Saga Communications. It trades about 0.01 of its potential returns per unit of risk. Saga Communications is currently generating about -0.13 per unit of risk. If you would invest 215.00 in iHeartMedia on August 28, 2024 and sell it today you would lose (35.00) from holding iHeartMedia or give up 16.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
iHeartMedia vs. Saga Communications
Performance |
| Timeline |
| iHeartMedia |
| Saga Communications |
IHeartMedia and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IHeartMedia and Saga Communications
The main advantage of trading using opposite IHeartMedia and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHeartMedia position performs unexpectedly, Saga Communications 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 Saga Communications will offset losses from the drop in Saga Communications' long position.| IHeartMedia vs. RTL Group SA | IHeartMedia vs. ITV plc | IHeartMedia vs. ITV PLC ADR | IHeartMedia vs. ProSiebenSat1 Media AG |
| Saga Communications vs. Walt Disney | Saga Communications vs. Roku Inc | Saga Communications vs. Netflix | Saga Communications vs. AMC Entertainment Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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