Correlation Between Saga Communications and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Saga Communications and IHeartMedia 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 IHeartMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saga Communications and iHeartMedia Class A, you can compare the effects of market volatilities on Saga Communications and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Communications and IHeartMedia.
Diversification Opportunities for Saga Communications and IHeartMedia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Saga and IHeartMedia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia Class has no effect on the direction of Saga Communications i.e., Saga Communications and IHeartMedia go up and down completely randomly.
Pair Corralation between Saga Communications and IHeartMedia
Considering the 90-day investment horizon Saga Communications is expected to under-perform the IHeartMedia. But the stock apears to be less risky and, when comparing its historical volatility, Saga Communications is 3.55 times less risky than IHeartMedia. The stock trades about -0.31 of its potential returns per unit of risk. The iHeartMedia Class A is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 170.00 in iHeartMedia Class A on August 24, 2024 and sell it today you would earn a total of 75.00 from holding iHeartMedia Class A or generate 44.12% 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. iHeartMedia Class A
Performance |
| Timeline |
| Saga Communications |
| iHeartMedia Class |
Saga Communications and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saga Communications and IHeartMedia
The main advantage of trading using opposite Saga Communications and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saga Communications position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia's 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 |
| IHeartMedia vs. Beasley Broadcast Group | IHeartMedia vs. Saga Communications | IHeartMedia vs. E W Scripps | IHeartMedia vs. Gray Television |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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