Correlation Between Tegna and Discovery Metals
Can any of the company-specific risk be diversified away by investing in both Tegna and Discovery Metals 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 Discovery Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tegna Inc and Discovery Metals Corp, you can compare the effects of market volatilities on Tegna and Discovery Metals 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 Discovery Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tegna and Discovery Metals.
Diversification Opportunities for Tegna and Discovery Metals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tegna and Discovery is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tegna Inc and Discovery Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery Metals Corp 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 Discovery Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery Metals Corp has no effect on the direction of Tegna i.e., Tegna and Discovery Metals go up and down completely randomly.
Pair Corralation between Tegna and Discovery Metals
Given the investment horizon of 90 days Tegna is expected to generate 4.89 times less return on investment than Discovery Metals. But when comparing it to its historical volatility, Tegna Inc is 2.84 times less risky than Discovery Metals. It trades about 0.05 of its potential returns per unit of risk. Discovery Metals Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Discovery Metals Corp on November 9, 2024 and sell it today you would earn a total of 65.00 from holding Discovery Metals Corp or generate 130.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tegna Inc vs. Discovery Metals Corp
Performance |
| Timeline |
| Tegna Inc |
| Discovery Metals Corp |
Tegna and Discovery Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tegna and Discovery Metals
The main advantage of trading using opposite Tegna and Discovery Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tegna position performs unexpectedly, Discovery Metals 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 Discovery Metals will offset losses from the drop in Discovery Metals' 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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