Correlation Between Nexstar Broadcasting and Warner Bros
Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and Warner Bros 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 Warner Bros 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 Warner Bros Discovery, you can compare the effects of market volatilities on Nexstar Broadcasting and Warner Bros 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 Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Warner Bros.
Diversification Opportunities for Nexstar Broadcasting and Warner Bros
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nexstar and Warner is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery 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 Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Warner Bros go up and down completely randomly.
Pair Corralation between Nexstar Broadcasting and Warner Bros
Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to under-perform the Warner Bros. But the stock apears to be less risky and, when comparing its historical volatility, Nexstar Broadcasting Group is 1.54 times less risky than Warner Bros. The stock trades about -0.15 of its potential returns per unit of risk. The Warner Bros Discovery is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,051 in Warner Bros Discovery on November 8, 2024 and sell it today you would lose (32.00) from holding Warner Bros Discovery or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexstar Broadcasting Group vs. Warner Bros Discovery
Performance |
| Timeline |
| Nexstar Broadcasting |
| Warner Bros Discovery |
Nexstar Broadcasting and Warner Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexstar Broadcasting and Warner Bros
The main advantage of trading using opposite Nexstar Broadcasting and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, Warner Bros 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 Warner Bros will offset losses from the drop in Warner Bros' long position.| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Paramount Global Class | Warner Bros vs. Paramount Global 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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