Correlation Between Tegna and BYD Company
Can any of the company-specific risk be diversified away by investing in both Tegna and BYD Company 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 Tegna and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tegna Inc and BYD Company Limited, you can compare the effects of market volatilities on Tegna and BYD Company 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 Tegna with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tegna and BYD Company.
Diversification Opportunities for Tegna and BYD Company
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tegna and BYD is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tegna Inc and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and Tegna 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 Tegna Inc are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of Tegna i.e., Tegna and BYD Company go up and down completely randomly.
Pair Corralation between Tegna and BYD Company
Given the investment horizon of 90 days Tegna Inc is expected to under-perform the BYD Company. But the stock apears to be less risky and, when comparing its historical volatility, Tegna Inc is 1.72 times less risky than BYD Company. The stock trades about -0.03 of its potential returns per unit of risk. The BYD Company Limited is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,281 in BYD Company Limited on November 9, 2024 and sell it today you would earn a total of 374.00 from holding BYD Company Limited or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tegna Inc vs. BYD Company Limited
Performance |
| Timeline |
| Tegna Inc |
| BYD Limited |
Tegna and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tegna and BYD Company
The main advantage of trading using opposite Tegna and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tegna position performs unexpectedly, BYD Company 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 BYD Company will offset losses from the drop in BYD Company's long position.| Tegna vs. E W Scripps | Tegna vs. Gray Television | Tegna vs. iHeartMedia Class A | Tegna vs. Cumulus Media Class |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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