Correlation Between Maiden Holdings and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both Maiden Holdings and Nexstar Broadcasting 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 Maiden Holdings and Nexstar Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maiden Holdings and Nexstar Broadcasting Group, you can compare the effects of market volatilities on Maiden Holdings and Nexstar Broadcasting 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 Maiden Holdings with a short position of Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and Nexstar Broadcasting.
Diversification Opportunities for Maiden Holdings and Nexstar Broadcasting
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maiden and Nexstar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between Maiden Holdings and Nexstar Broadcasting
Given the investment horizon of 90 days Maiden Holdings is expected to generate 1.12 times less return on investment than Nexstar Broadcasting. But when comparing it to its historical volatility, Maiden Holdings is 1.24 times less risky than Nexstar Broadcasting. It trades about 0.06 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,328 in Nexstar Broadcasting Group on September 5, 2024 and sell it today you would earn a total of 1,713 from holding Nexstar Broadcasting Group or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maiden Holdings vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| Maiden Holdings |
| Nexstar Broadcasting |
Maiden Holdings and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maiden Holdings and Nexstar Broadcasting
The main advantage of trading using opposite Maiden Holdings and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden Holdings position performs unexpectedly, Nexstar Broadcasting 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 Nexstar Broadcasting will offset losses from the drop in Nexstar Broadcasting's long position.| Maiden Holdings vs. Maiden Holdings North | Maiden Holdings vs. Reinsurance Group of | Maiden Holdings vs. Entergy Arkansas LLC | Maiden Holdings vs. Entergy New Orleans |
| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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