Correlation Between Gray Television and Cable One

Can any of the company-specific risk be diversified away by investing in both Gray Television and Cable One 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 Gray Television and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gray Television and Cable One, you can compare the effects of market volatilities on Gray Television and Cable One 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 Gray Television with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gray Television and Cable One.

Diversification Opportunities for Gray Television and Cable One

-0.77

Correlation Coefficient

Gray Television  Cable One

Pay attention - limited upside

The 3 months correlation between Gray and Cable is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Gray Television 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 Gray Television are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Gray Television i.e., Gray Television and Cable One go up and down completely randomly.

Pair Corralation between Gray Television and Cable One

Considering the 90-day investment horizon Gray Television is expected to generate 1.15 times more return on investment than Cable One. However, Gray Television is 1.15 times more volatile than Cable One. It trades about 0.21 of its potential returns per unit of risk. Cable One is currently generating about -0.14 per unit of risk. If you would invest  306.00  in Gray Television on December 26, 2024 and sell it today you would earn a total of  175.00  from holding Gray Television or generate 57.19% return on investment over 90 days.

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

Gray Television  vs.  Cable One

Gray Television

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gray Television displayed solid returns over the last few months and may actually be approaching a breakup point.

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers 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.

Pair Trading with Gray Television and Cable One

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

The idea behind Gray Television and Cable One 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.