Correlation Between Nexstar Broadcasting and Broadleaf

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

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

Diversification Opportunities for Nexstar Broadcasting and Broadleaf

0.1

Correlation Coefficient

Nexstar Broadcasting  Broadleaf

Average diversification

The 3 months correlation between Nexstar and Broadleaf is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Broadleaf Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadleaf and Nexstar Broadcasting 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 Nexstar Broadcasting Group are associated (or correlated) with Broadleaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadleaf has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Broadleaf go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Broadleaf

Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 12.45 times less return on investment than Broadleaf. But when comparing it to its historical volatility, Nexstar Broadcasting Group is 2.86 times less risky than Broadleaf. It trades about 0.02 of its potential returns per unit of risk. Broadleaf Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Broadleaf Co on September 24, 2024 and sell it today you would earn a total of  198.00  from holding Broadleaf Co or generate 63.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Broadleaf Co

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Broadcasting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Broadleaf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadleaf Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Broadleaf is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nexstar Broadcasting and Broadleaf

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

The idea behind Nexstar Broadcasting Group and Broadleaf Co 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.