Correlation Between Nexstar Broadcasting and Lions Gate
Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and Lions Gate 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 Nexstar Broadcasting and Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexstar Broadcasting Group and Lions Gate Entertainment, you can compare the effects of market volatilities on Nexstar Broadcasting and Lions Gate 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 Nexstar Broadcasting with a short position of Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Lions Gate.
Diversification Opportunities for Nexstar Broadcasting and Lions Gate
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nexstar and Lions is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment and Nexstar Broadcasting 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 Nexstar Broadcasting Group are associated (or correlated) with Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Lions Gate go up and down completely randomly.
Pair Corralation between Nexstar Broadcasting and Lions Gate
Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 1.2 times less return on investment than Lions Gate. But when comparing it to its historical volatility, Nexstar Broadcasting Group is 1.53 times less risky than Lions Gate. It trades about 0.04 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 783.00 in Lions Gate Entertainment on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Lions Gate Entertainment or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexstar Broadcasting Group vs. Lions Gate Entertainment
Performance |
| Timeline |
| Nexstar Broadcasting |
| Lions Gate Entertainment |
Nexstar Broadcasting and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexstar Broadcasting and Lions Gate
The main advantage of trading using opposite Nexstar Broadcasting and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. AMC Networks | Nexstar Broadcasting vs. Marcus |
| Lions Gate vs. Lions Gate Entertainment | Lions Gate vs. AMC Networks | Lions Gate vs. Altice USA | Lions Gate vs. Liberty Broadband Srs |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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