Correlation Between Nexstar Media and UDR

Can any of the company-specific risk be diversified away by investing in both Nexstar Media and UDR 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 Media and UDR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nexstar Media Group and UDR Inc, you can compare the effects of market volatilities on Nexstar Media and UDR 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 Media with a short position of UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Media and UDR.

Diversification Opportunities for Nexstar Media and UDR

0.25

Correlation Coefficient

Nexstar Media  UDR

Modest diversification

The 3 months correlation between Nexstar and UDR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Media Group and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Nexstar Media 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 Media Group are associated (or correlated) with UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Nexstar Media i.e., Nexstar Media and UDR go up and down completely randomly.

Pair Corralation between Nexstar Media and UDR

Assuming the 90 days horizon Nexstar Media Group is expected to generate 1.82 times more return on investment than UDR. However, Nexstar Media is 1.82 times more volatile than UDR Inc. It trades about 0.04 of its potential returns per unit of risk. UDR Inc is currently generating about -0.03 per unit of risk. If you would invest  14,797  in Nexstar Media Group on December 20, 2024 and sell it today you would earn a total of  658.00  from holding Nexstar Media Group or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nexstar Media Group  vs.  UDR Inc

Nexstar Media Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Media Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nexstar Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UDR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days UDR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UDR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nexstar Media and UDR

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

The idea behind Nexstar Media Group and UDR 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..