Correlation Between Nexstar Broadcasting and Davis Commodities

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and Davis Commodities 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 Davis Commodities 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 Davis Commodities Limited, you can compare the effects of market volatilities on Nexstar Broadcasting and Davis Commodities 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 Davis Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Davis Commodities.

Diversification Opportunities for Nexstar Broadcasting and Davis Commodities

-0.07

Correlation Coefficient

Nexstar Broadcasting  Davis Commodities

Good diversification

The 3 months correlation between Nexstar and Davis is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Davis Commodities go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Davis Commodities

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 0.28 times more return on investment than Davis Commodities. However, Nexstar Broadcasting Group is 3.62 times less risky than Davis Commodities. It trades about 0.0 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.01 per unit of risk. If you would invest  16,935  in Nexstar Broadcasting Group on October 10, 2024 and sell it today you would lose (1,182) from holding Nexstar Broadcasting Group or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.33%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Davis Commodities Limited

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Davis Commodities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis Commodities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Nexstar Broadcasting and Davis Commodities

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

The idea behind Nexstar Broadcasting Group and Davis Commodities Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.