Correlation Between Nexstar Broadcasting and Stagwell

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

Diversification Opportunities for Nexstar Broadcasting and Stagwell

-0.01

Correlation Coefficient

Nexstar Broadcasting  Stagwell

Good diversification

The 3 months correlation between Nexstar and Stagwell is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Stagwell go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Stagwell

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 0.77 times more return on investment than Stagwell. However, Nexstar Broadcasting Group is 1.29 times less risky than Stagwell. It trades about -0.31 of its potential returns per unit of risk. Stagwell is currently generating about -0.46 per unit of risk. If you would invest  17,061  in Nexstar Broadcasting Group on September 24, 2024 and sell it today you would lose (1,301) from holding Nexstar Broadcasting Group or give up 7.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Stagwell

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.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nexstar Broadcasting and Stagwell

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

The idea behind Nexstar Broadcasting Group and Stagwell 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.