Correlation Between Nexstar Media and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Nexstar Media and Summit Materials 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 Media and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexstar Media Group and Summit Materials, you can compare the effects of market volatilities on Nexstar Media and Summit Materials 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 Media with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Media and Summit Materials.
Diversification Opportunities for Nexstar Media and Summit Materials
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nexstar and Summit is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Media Group and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Nexstar Media 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 Media Group are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Nexstar Media i.e., Nexstar Media and Summit Materials go up and down completely randomly.
Pair Corralation between Nexstar Media and Summit Materials
Assuming the 90 days horizon Nexstar Media Group is expected to under-perform the Summit Materials. In addition to that, Nexstar Media is 2.27 times more volatile than Summit Materials. It trades about -0.02 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.08 per unit of volatility. If you would invest 4,940 in Summit Materials on November 3, 2024 and sell it today you would earn a total of 60.00 from holding Summit Materials or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexstar Media Group vs. Summit Materials
Performance |
| Timeline |
| Nexstar Media Group |
| Summit Materials |
Nexstar Media and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexstar Media and Summit Materials
The main advantage of trading using opposite Nexstar Media and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Media position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Nexstar Media vs. Nomad Foods | Nexstar Media vs. Fair Isaac Corp | Nexstar Media vs. Austevoll Seafood ASA | Nexstar Media vs. SOGECLAIR SA INH |
| Summit Materials vs. SIVERS SEMICONDUCTORS AB | Summit Materials vs. NorAm Drilling AS | Summit Materials vs. Volkswagen AG | Summit Materials vs. Darden Restaurants |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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