Correlation Between Loop Media and IHeartMedia

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

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

Diversification Opportunities for Loop Media and IHeartMedia

-0.59

Correlation Coefficient

Loop Media  IHeartMedia

Excellent diversification

The 3 months correlation between Loop and IHeartMedia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Loop Media and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia and Loop Media 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 Loop Media 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 Loop Media i.e., Loop Media and IHeartMedia go up and down completely randomly.

Pair Corralation between Loop Media and IHeartMedia

If you would invest  150.00  in iHeartMedia on September 12, 2024 and sell it today you would earn a total of  65.00  from holding iHeartMedia or generate 43.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Loop Media  vs.  iHeartMedia

Loop Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Loop Media is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iHeartMedia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iHeartMedia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IHeartMedia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loop Media and IHeartMedia

The main advantage of trading using opposite Loop Media and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Media 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 Loop Media 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.