Correlation Between Nexstar Broadcasting and 532716AN7

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and 532716AN7 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 532716AN7 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 L Brands 76, you can compare the effects of market volatilities on Nexstar Broadcasting and 532716AN7 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 532716AN7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and 532716AN7.

Diversification Opportunities for Nexstar Broadcasting and 532716AN7

0.16

Correlation Coefficient

Nexstar Broadcasting  532716AN7

Average diversification

The 3 months correlation between Nexstar and 532716AN7 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and L Brands 76 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Brands 76 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 532716AN7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Brands 76 has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and 532716AN7 go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and 532716AN7

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 0.92 times more return on investment than 532716AN7. However, Nexstar Broadcasting Group is 1.09 times less risky than 532716AN7. It trades about -0.06 of its potential returns per unit of risk. L Brands 76 is currently generating about -0.09 per unit of risk. If you would invest  16,919  in Nexstar Broadcasting Group on October 25, 2024 and sell it today you would lose (1,449) from holding Nexstar Broadcasting Group or give up 8.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  L Brands 76

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

L Brands 76

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Brands 76 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for L Brands 76 investors.

Pair Trading with Nexstar Broadcasting and 532716AN7

The main advantage of trading using opposite Nexstar Broadcasting and 532716AN7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting position performs unexpectedly, 532716AN7 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 532716AN7 will offset losses from the drop in 532716AN7's long position.

The idea behind Nexstar Broadcasting Group and L Brands 76 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.