Correlation Between TVA and Saga Communications
Can any of the company-specific risk be diversified away by investing in both TVA and Saga 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 TVA and Saga Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TVA Group and Saga Communications, you can compare the effects of market volatilities on TVA and Saga 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 TVA with a short position of Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of TVA and Saga Communications.
Diversification Opportunities for TVA and Saga Communications
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TVA and Saga is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TVA Group and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications and TVA 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 TVA Group are associated (or correlated) with Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of TVA i.e., TVA and Saga Communications go up and down completely randomly.
Pair Corralation between TVA and Saga Communications
Assuming the 90 days horizon TVA Group is expected to generate 0.37 times more return on investment than Saga Communications. However, TVA Group is 2.68 times less risky than Saga Communications. It trades about -0.08 of its potential returns per unit of risk. Saga Communications is currently generating about -0.04 per unit of risk. If you would invest 100.00 in TVA Group on August 29, 2024 and sell it today you would lose (15.00) from holding TVA Group or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
TVA Group vs. Saga Communications
Performance |
| Timeline |
| TVA Group |
| Saga Communications |
TVA and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TVA and Saga Communications
The main advantage of trading using opposite TVA and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TVA position performs unexpectedly, Saga 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 Saga Communications will offset losses from the drop in Saga Communications' long position.The idea behind TVA Group and Saga Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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