Correlation Between Clear Channel and Mirriad Advertising

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

Diversification Opportunities for Clear Channel and Mirriad Advertising

-0.65

Correlation Coefficient

Clear Channel  Mirriad Advertising

Excellent diversification

The 3 months correlation between Clear and Mirriad is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clear Channel Outdoor and Mirriad Advertising plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirriad Advertising plc 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 Mirriad Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirriad Advertising plc has no effect on the direction of Clear Channel i.e., Clear Channel and Mirriad Advertising go up and down completely randomly.

Pair Corralation between Clear Channel and Mirriad Advertising

Considering the 90-day investment horizon Clear Channel Outdoor is expected to under-perform the Mirriad Advertising. But the stock apears to be less risky and, when comparing its historical volatility, Clear Channel Outdoor is 7.19 times less risky than Mirriad Advertising. The stock trades about -0.12 of its potential returns per unit of risk. The Mirriad Advertising plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.25  in Mirriad Advertising plc on December 28, 2024 and sell it today you would earn a total of  0.15  from holding Mirriad Advertising plc or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Clear Channel Outdoor  vs.  Mirriad Advertising plc

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.

Mirriad Advertising plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mirriad Advertising plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Mirriad Advertising reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clear Channel and Mirriad Advertising

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

The idea behind Clear Channel Outdoor and Mirriad Advertising plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.