Correlation Between Sea and Tegna
Can any of the company-specific risk be diversified away by investing in both Sea and Tegna 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 Sea and Tegna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Tegna Inc, you can compare the effects of market volatilities on Sea and Tegna 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 Sea with a short position of Tegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Tegna.
Diversification Opportunities for Sea and Tegna
Very poor diversification
The 3 months correlation between Sea and Tegna is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Tegna Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tegna Inc and Sea 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 Sea are associated (or correlated) with Tegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tegna Inc has no effect on the direction of Sea i.e., Sea and Tegna go up and down completely randomly.
Pair Corralation between Sea and Tegna
Allowing for the 90-day total investment horizon Sea is expected to generate 1.8 times more return on investment than Tegna. However, Sea is 1.8 times more volatile than Tegna Inc. It trades about 0.05 of its potential returns per unit of risk. Tegna Inc is currently generating about 0.01 per unit of risk. If you would invest 6,138 in Sea on August 23, 2024 and sell it today you would earn a total of 5,495 from holding Sea or generate 89.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Tegna Inc
Performance |
| Timeline |
| Sea |
| Tegna Inc |
Sea and Tegna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Tegna
The main advantage of trading using opposite Sea and Tegna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Tegna 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 Tegna will offset losses from the drop in Tegna's long position.The idea behind Sea and Tegna Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tegna vs. E W Scripps | Tegna vs. Gray Television | Tegna vs. iHeartMedia Class A | Tegna 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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