Correlation Between Gray Television and IHeartMedia

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

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

Diversification Opportunities for Gray Television and IHeartMedia

-0.72

Correlation Coefficient

Gray Television  IHeartMedia

Pay attention - limited upside

The 3 months correlation between Gray and IHeartMedia is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia has no effect on the direction of Gray Television i.e., Gray Television and IHeartMedia go up and down completely randomly.

Pair Corralation between Gray Television and IHeartMedia

Considering the 90-day investment horizon Gray Television is expected to generate 0.81 times more return on investment than IHeartMedia. However, Gray Television is 1.24 times less risky than IHeartMedia. It trades about 0.18 of its potential returns per unit of risk. iHeartMedia is currently generating about -0.2 per unit of risk. If you would invest  291.00  in Gray Television on December 29, 2024 and sell it today you would earn a total of  140.00  from holding Gray Television or generate 48.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Gray Television  vs.  iHeartMedia

Gray Television

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 14 (%) 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.

iHeartMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days iHeartMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gray Television and IHeartMedia

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

The idea behind Gray Television and iHeartMedia 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.