Correlation Between Nexstar Broadcasting and Beauty Health

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

Diversification Opportunities for Nexstar Broadcasting and Beauty Health

0.19

Correlation Coefficient

Nexstar Broadcasting  Beauty Health

Average diversification

The 3 months correlation between Nexstar and Beauty is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Beauty Health go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Beauty Health

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to under-perform the Beauty Health. But the stock apears to be less risky and, when comparing its historical volatility, Nexstar Broadcasting Group is 3.52 times less risky than Beauty Health. The stock trades about -0.15 of its potential returns per unit of risk. The Beauty Health Co is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Beauty Health Co on October 10, 2024 and sell it today you would earn a total of  40.00  from holding Beauty Health Co or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Beauty Health 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Beauty Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Beauty Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexstar Broadcasting and Beauty Health

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

The idea behind Nexstar Broadcasting Group and Beauty Health 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 Transaction History module to view history of all your transactions and understand their impact on performance.