Correlation Between Nexstar Media and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Nexstar Media and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on Nexstar Media and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Media and Canadian Utilities.
Diversification Opportunities for Nexstar Media and Canadian Utilities
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexstar and Canadian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Media Group and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Nexstar Media i.e., Nexstar Media and Canadian Utilities go up and down completely randomly.
Pair Corralation between Nexstar Media and Canadian Utilities
Assuming the 90 days horizon Nexstar Media Group is expected to generate 1.94 times more return on investment than Canadian Utilities. However, Nexstar Media is 1.94 times more volatile than Canadian Utilities Limited. It trades about -0.07 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.23 per unit of risk. If you would invest 15,505 in Nexstar Media Group on November 7, 2024 and sell it today you would lose (420.00) from holding Nexstar Media Group or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexstar Media Group vs. Canadian Utilities Limited
Performance |
| Timeline |
| Nexstar Media Group |
| Canadian Utilities |
Nexstar Media and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexstar Media and Canadian Utilities
The main advantage of trading using opposite Nexstar Media and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Media position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Nexstar Media vs. US Physical Therapy | Nexstar Media vs. British American Tobacco | Nexstar Media vs. United Breweries Co | Nexstar Media vs. Cleanaway Waste Management |
| Canadian Utilities vs. Kingdee International Software | Canadian Utilities vs. Scottish Mortgage Investment | Canadian Utilities vs. Magic Software Enterprises | Canadian Utilities vs. Guidewire Software |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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