Correlation Between RTL Group and Gray Television
Can any of the company-specific risk be diversified away by investing in both RTL Group and Gray Television 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 RTL Group and Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RTL Group SA and Gray Television, you can compare the effects of market volatilities on RTL Group and Gray Television 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 RTL Group with a short position of Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL Group and Gray Television.
Diversification Opportunities for RTL Group and Gray Television
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RTL and Gray is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television and RTL Group 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 RTL Group SA are associated (or correlated) with Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of RTL Group i.e., RTL Group and Gray Television go up and down completely randomly.
Pair Corralation between RTL Group and Gray Television
Assuming the 90 days horizon RTL Group SA is expected to generate 0.3 times more return on investment than Gray Television. However, RTL Group SA is 3.32 times less risky than Gray Television. It trades about -0.27 of its potential returns per unit of risk. Gray Television is currently generating about -0.15 per unit of risk. If you would invest 325.00 in RTL Group SA on August 27, 2024 and sell it today you would lose (36.00) from holding RTL Group SA or give up 11.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RTL Group SA vs. Gray Television
Performance |
| Timeline |
| RTL Group SA |
| Gray Television |
RTL Group and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTL Group and Gray Television
The main advantage of trading using opposite RTL Group and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTL Group position performs unexpectedly, Gray Television 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 Gray Television will offset losses from the drop in Gray Television's long position.| RTL Group vs. ITV plc | RTL Group vs. ITV PLC ADR | RTL Group vs. iHeartMedia | RTL Group vs. ProSiebenSat1 Media AG |
| Gray Television vs. E W Scripps | Gray Television vs. Saga Communications | Gray Television vs. iHeartMedia Class A | Gray Television vs. Cumulus Media 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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