Correlation Between Nexstar Broadcasting and PHINIA

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

Diversification Opportunities for Nexstar Broadcasting and PHINIA

0.14

Correlation Coefficient

Nexstar Broadcasting  PHINIA

Average diversification

The 3 months correlation between Nexstar and PHINIA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and PHINIA go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and PHINIA

Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 13.46 times less return on investment than PHINIA. But when comparing it to its historical volatility, Nexstar Broadcasting Group is 1.09 times less risky than PHINIA. It trades about 0.01 of its potential returns per unit of risk. PHINIA Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,814  in PHINIA Inc on October 9, 2024 and sell it today you would earn a total of  1,900  from holding PHINIA Inc or generate 67.52% 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.  PHINIA Inc

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.

PHINIA Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, PHINIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nexstar Broadcasting and PHINIA

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

The idea behind Nexstar Broadcasting Group and PHINIA Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.