Correlation Between Clear Channel and Magnite

Can any of the company-specific risk be diversified away by investing in both Clear Channel and Magnite 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 Magnite 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 Magnite, you can compare the effects of market volatilities on Clear Channel and Magnite 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 Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clear Channel and Magnite.

Diversification Opportunities for Clear Channel and Magnite

-0.21

Correlation Coefficient

Clear Channel  Magnite

Very good diversification

The 3 months correlation between Clear and Magnite is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clear Channel Outdoor and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Clear Channel i.e., Clear Channel and Magnite go up and down completely randomly.

Pair Corralation between Clear Channel and Magnite

Considering the 90-day investment horizon Clear Channel Outdoor is expected to under-perform the Magnite. But the stock apears to be less risky and, when comparing its historical volatility, Clear Channel Outdoor is 1.29 times less risky than Magnite. The stock trades about -0.16 of its potential returns per unit of risk. The Magnite is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,719  in Magnite on December 1, 2024 and sell it today you would lose (142.00) from holding Magnite or give up 8.26% 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.  Magnite

Clear Channel Outdoor

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Magnite

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Magnite is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Clear Channel and Magnite

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

The idea behind Clear Channel Outdoor and Magnite 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.