Correlation Between IQIYI and Gray Television
Can any of the company-specific risk be diversified away by investing in both IQIYI 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 IQIYI and Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Gray Television, you can compare the effects of market volatilities on IQIYI 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 IQIYI with a short position of Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Gray Television.
Diversification Opportunities for IQIYI and Gray Television
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IQIYI and Gray is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television and IQIYI 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 iQIYI Inc 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 IQIYI i.e., IQIYI and Gray Television go up and down completely randomly.
Pair Corralation between IQIYI and Gray Television
Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the Gray Television. But the stock apears to be less risky and, when comparing its historical volatility, iQIYI Inc is 1.1 times less risky than Gray Television. The stock trades about -0.05 of its potential returns per unit of risk. The Gray Television is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 660.00 in Gray Television on August 31, 2024 and sell it today you would lose (229.00) from holding Gray Television or give up 34.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Gray Television
Performance |
| Timeline |
| iQIYI Inc |
| Gray Television |
IQIYI and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Gray Television
The main advantage of trading using opposite IQIYI and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI 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.The idea behind iQIYI Inc and Gray Television pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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