Correlation Between Clear Channel and Emerald Expositions

Can any of the company-specific risk be diversified away by investing in both Clear Channel and Emerald Expositions 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 Clear Channel and Emerald Expositions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clear Channel Outdoor and Emerald Expositions Events, you can compare the effects of market volatilities on Clear Channel and Emerald Expositions 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 Clear Channel with a short position of Emerald Expositions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clear Channel and Emerald Expositions.

Diversification Opportunities for Clear Channel and Emerald Expositions

-0.01

Correlation Coefficient

Clear Channel  Emerald Expositions

Good diversification

The 3 months correlation between Clear and Emerald is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Clear Channel Outdoor and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions and Clear Channel 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 Clear Channel Outdoor are associated (or correlated) with Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Clear Channel i.e., Clear Channel and Emerald Expositions go up and down completely randomly.

Pair Corralation between Clear Channel and Emerald Expositions

Considering the 90-day investment horizon Clear Channel Outdoor is expected to under-perform the Emerald Expositions. But the stock apears to be less risky and, when comparing its historical volatility, Clear Channel Outdoor is 1.06 times less risky than Emerald Expositions. The stock trades about 0.0 of its potential returns per unit of risk. The Emerald Expositions Events is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  541.00  in Emerald Expositions Events on October 5, 2024 and sell it today you would lose (67.00) from holding Emerald Expositions Events or give up 12.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Clear Channel Outdoor  vs.  Emerald Expositions Events

Clear Channel Outdoor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Channel Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Clear Channel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Emerald Expositions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Expositions Events are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Emerald Expositions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clear Channel and Emerald Expositions

The main advantage of trading using opposite Clear Channel and Emerald Expositions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clear Channel position performs unexpectedly, Emerald Expositions 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 Emerald Expositions will offset losses from the drop in Emerald Expositions' long position.

The idea behind Clear Channel Outdoor and Emerald Expositions Events 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.