Correlation Between RTL Group and Saga Communications
Can any of the company-specific risk be diversified away by investing in both RTL Group and Saga Communications 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 Saga Communications 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 Saga Communications, you can compare the effects of market volatilities on RTL Group and Saga Communications 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 Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL Group and Saga Communications.
Diversification Opportunities for RTL Group and Saga Communications
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RTL and Saga is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications 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 Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of RTL Group i.e., RTL Group and Saga Communications go up and down completely randomly.
Pair Corralation between RTL Group and Saga Communications
Assuming the 90 days horizon RTL Group SA is expected to generate 1.59 times more return on investment than Saga Communications. However, RTL Group is 1.59 times more volatile than Saga Communications. It trades about -0.02 of its potential returns per unit of risk. Saga Communications is currently generating about -0.13 per unit of risk. If you would invest 347.00 in RTL Group SA on August 28, 2024 and sell it today you would lose (58.00) from holding RTL Group SA or give up 16.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.0% |
| Values | Daily Returns |
RTL Group SA vs. Saga Communications
Performance |
| Timeline |
| RTL Group SA |
| Saga Communications |
RTL Group and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTL Group and Saga Communications
The main advantage of trading using opposite RTL Group and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTL Group position performs unexpectedly, Saga Communications 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 Saga Communications will offset losses from the drop in Saga Communications' long position.| RTL Group vs. ITV plc | RTL Group vs. ITV PLC ADR | RTL Group vs. iHeartMedia | RTL Group vs. ProSiebenSat1 Media AG |
| Saga Communications vs. Walt Disney | Saga Communications vs. Roku Inc | Saga Communications vs. Netflix | Saga Communications vs. AMC Entertainment Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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