Correlation Between Saga Communications and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Saga Communications and Charter 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 Saga Communications and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saga Communications and Charter Communications, you can compare the effects of market volatilities on Saga Communications and Charter 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 Saga Communications with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Communications and Charter Communications.
Diversification Opportunities for Saga Communications and Charter Communications
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Saga and Charter is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Saga Communications 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 Saga Communications are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Saga Communications i.e., Saga Communications and Charter Communications go up and down completely randomly.
Pair Corralation between Saga Communications and Charter Communications
Considering the 90-day investment horizon Saga Communications is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, Saga Communications is 1.53 times less risky than Charter Communications. The stock trades about -0.31 of its potential returns per unit of risk. The Charter Communications is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 33,222 in Charter Communications on August 24, 2024 and sell it today you would earn a total of 5,801 from holding Charter Communications or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Saga Communications vs. Charter Communications
Performance |
| Timeline |
| Saga Communications |
| Charter Communications |
Saga Communications and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saga Communications and Charter Communications
The main advantage of trading using opposite Saga Communications and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saga Communications position performs unexpectedly, Charter 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Saga Communications vs. iHeartMedia Class A | Saga Communications vs. Beasley Broadcast Group | Saga Communications vs. Cumulus Media Class | Saga Communications vs. Mediaco Holding |
| Charter Communications vs. Eshallgo Class A | Charter Communications vs. Amtech Systems | Charter Communications vs. Gold Fields Ltd | Charter Communications vs. Aegean Airlines SA |
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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