Correlation Between Saga Communications and RTL Group
Can any of the company-specific risk be diversified away by investing in both Saga Communications and RTL Group 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 RTL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saga Communications and RTL Group SA, you can compare the effects of market volatilities on Saga Communications and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Communications and RTL Group.
Diversification Opportunities for Saga Communications and RTL Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saga and RTL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Saga Communications i.e., Saga Communications and RTL Group go up and down completely randomly.
Pair Corralation between Saga Communications and RTL Group
Considering the 90-day investment horizon Saga Communications is expected to under-perform the RTL Group. But the stock apears to be less risky and, when comparing its historical volatility, Saga Communications is 1.82 times less risky than RTL Group. The stock trades about -0.03 of its potential returns per unit of risk. The RTL Group SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 368.00 in RTL Group SA on August 31, 2024 and sell it today you would lose (69.00) from holding RTL Group SA or give up 18.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.17% |
| Values | Daily Returns |
Saga Communications vs. RTL Group SA
Performance |
| Timeline |
| Saga Communications |
| RTL Group SA |
Saga Communications and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saga Communications and RTL Group
The main advantage of trading using opposite Saga Communications and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saga Communications position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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