Correlation Between Nexstar Broadcasting and Netflix
Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on Nexstar Broadcasting and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Netflix.
Diversification Opportunities for Nexstar Broadcasting and Netflix
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nexstar and Netflix is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Netflix go up and down completely randomly.
Pair Corralation between Nexstar Broadcasting and Netflix
Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to under-perform the Netflix. But the stock apears to be less risky and, when comparing its historical volatility, Nexstar Broadcasting Group is 1.1 times less risky than Netflix. The stock trades about -0.3 of its potential returns per unit of risk. The Netflix is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 86,559 in Netflix on September 24, 2024 and sell it today you would earn a total of 4,586 from holding Netflix or generate 5.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nexstar Broadcasting Group vs. Netflix
Performance |
Timeline |
Nexstar Broadcasting |
Netflix |
Nexstar Broadcasting and Netflix Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nexstar Broadcasting and Netflix
The main advantage of trading using opposite Nexstar Broadcasting and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.Nexstar Broadcasting vs. News Corp A | Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Paramount Global Class | Nexstar Broadcasting vs. Liberty Media |
Netflix vs. Warner Bros Discovery | Netflix vs. Paramount Global Class | Netflix vs. Live Nation Entertainment | Netflix vs. Nexstar Broadcasting Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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