Correlation Between INTERSHOP Communications and Nexstar Media

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

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

Diversification Opportunities for INTERSHOP Communications and Nexstar Media

0.12

Correlation Coefficient

INTERSHOP Communications  Nexstar Media

Average diversification

The 3 months correlation between INTERSHOP and Nexstar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie 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 INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft 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 INTERSHOP Communications i.e., INTERSHOP Communications and Nexstar Media go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Nexstar Media

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.54 times more return on investment than Nexstar Media. However, INTERSHOP Communications is 1.54 times more volatile than Nexstar Media Group. It trades about 0.06 of its potential returns per unit of risk. Nexstar Media Group is currently generating about 0.07 per unit of risk. If you would invest  175.00  in INTERSHOP Communications Aktiengesellschaft on December 24, 2024 and sell it today you would earn a total of  18.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 10.29% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Nexstar Media Group

INTERSHOP Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nexstar Media Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Media Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nexstar Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INTERSHOP Communications and Nexstar Media

The main advantage of trading using opposite INTERSHOP Communications and Nexstar Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.