Correlation Between United Breweries and Nexstar Media

Can any of the company-specific risk be diversified away by investing in both United Breweries and Nexstar Media 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 United Breweries and Nexstar Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Breweries Co and Nexstar Media Group, you can compare the effects of market volatilities on United Breweries and Nexstar Media 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 United Breweries with a short position of Nexstar Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Nexstar Media.

Diversification Opportunities for United Breweries and Nexstar Media

-0.39

Correlation Coefficient

United Breweries  Nexstar Media

Very good diversification

The 3 months correlation between United and Nexstar is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Nexstar Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Media Group and United Breweries 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 United Breweries Co are associated (or correlated) with Nexstar Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Media Group has no effect on the direction of United Breweries i.e., United Breweries and Nexstar Media go up and down completely randomly.

Pair Corralation between United Breweries and Nexstar Media

Assuming the 90 days trading horizon United Breweries Co is expected to under-perform the Nexstar Media. But the stock apears to be less risky and, when comparing its historical volatility, United Breweries Co is 1.13 times less risky than Nexstar Media. The stock trades about -0.01 of its potential returns per unit of risk. The Nexstar Media Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17,811  in Nexstar Media Group on October 24, 2024 and sell it today you would lose (3,081) from holding Nexstar Media Group or give up 17.3% of portfolio value over 90 days.

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

United Breweries Co  vs.  Nexstar Media Group

United Breweries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, United Breweries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nexstar Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nexstar Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Breweries and Nexstar Media

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

The idea behind United Breweries Co and Nexstar Media Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.