Correlation Between IHeartMedia and Tegna

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

By analyzing existing cross correlation between iHeartMedia Class A and Tegna Inc, you can compare the effects of market volatilities on IHeartMedia and Tegna 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 IHeartMedia with a short position of Tegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHeartMedia and Tegna.

Diversification Opportunities for IHeartMedia and Tegna

0.86

Correlation Coefficient

IHeartMedia  Tegna

Very poor diversification

The 3 months correlation between IHeartMedia and Tegna is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iHeartMedia Class A and Tegna Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tegna Inc and IHeartMedia 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 iHeartMedia Class A are associated (or correlated) with Tegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tegna Inc has no effect on the direction of IHeartMedia i.e., IHeartMedia and Tegna go up and down completely randomly.

Pair Corralation between IHeartMedia and Tegna

Given the investment horizon of 90 days iHeartMedia Class A is expected to generate 3.39 times more return on investment than Tegna. However, IHeartMedia is 3.39 times more volatile than Tegna Inc. It trades about 0.02 of its potential returns per unit of risk. Tegna Inc is currently generating about 0.06 per unit of risk. If you would invest  280.00  in iHeartMedia Class A on September 2, 2024 and sell it today you would lose (51.00) from holding iHeartMedia Class A or give up 18.21% of portfolio value over 90 days.

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

iHeartMedia Class A  vs.  Tegna Inc

iHeartMedia Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iHeartMedia Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IHeartMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tegna Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tegna Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tegna sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IHeartMedia and Tegna

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

The idea behind iHeartMedia Class A and Tegna Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.