Correlation Between Nexstar Broadcasting and LG Display
Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and LG Display 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 LG Display 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 LG Display Co, you can compare the effects of market volatilities on Nexstar Broadcasting and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and LG Display.
Diversification Opportunities for Nexstar Broadcasting and LG Display
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nexstar and LPL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and LG Display go up and down completely randomly.
Pair Corralation between Nexstar Broadcasting and LG Display
Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 0.91 times more return on investment than LG Display. However, Nexstar Broadcasting Group is 1.09 times less risky than LG Display. It trades about 0.01 of its potential returns per unit of risk. LG Display Co is currently generating about -0.05 per unit of risk. If you would invest 16,498 in Nexstar Broadcasting Group on December 4, 2024 and sell it today you would earn a total of 602.00 from holding Nexstar Broadcasting Group or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexstar Broadcasting Group vs. LG Display Co
Performance |
| Timeline |
| Nexstar Broadcasting |
| LG Display |
Nexstar Broadcasting and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexstar Broadcasting and LG Display
The main advantage of trading using opposite Nexstar Broadcasting and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Nexstar Broadcasting vs. News Corp B | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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