Correlation Between Nexstar Broadcasting and 126408GW7

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and 126408GW7 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 126408GW7 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 CSX P 475, you can compare the effects of market volatilities on Nexstar Broadcasting and 126408GW7 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 126408GW7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and 126408GW7.

Diversification Opportunities for Nexstar Broadcasting and 126408GW7

0.09

Correlation Coefficient

Nexstar Broadcasting  126408GW7

Significant diversification

The 3 months correlation between Nexstar and 126408GW7 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and CSX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 475 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 126408GW7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 475 has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and 126408GW7 go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and 126408GW7

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 1.91 times more return on investment than 126408GW7. However, Nexstar Broadcasting is 1.91 times more volatile than CSX P 475. It trades about -0.01 of its potential returns per unit of risk. CSX P 475 is currently generating about -0.15 per unit of risk. If you would invest  16,367  in Nexstar Broadcasting Group on September 30, 2024 and sell it today you would lose (453.00) from holding Nexstar Broadcasting Group or give up 2.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  CSX P 475

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.

CSX P 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX P 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CSX P 475 investors.

Pair Trading with Nexstar Broadcasting and 126408GW7

The main advantage of trading using opposite Nexstar Broadcasting and 126408GW7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, 126408GW7 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 126408GW7 will offset losses from the drop in 126408GW7's long position.

The idea behind Nexstar Broadcasting Group and CSX P 475 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.