Correlation Between Nexstar Media and WOLTERS KLUWER

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

Diversification Opportunities for Nexstar Media and WOLTERS KLUWER

-0.53

Correlation Coefficient

Nexstar Media  WOLTERS KLUWER

Excellent diversification

The 3 months correlation between Nexstar and WOLTERS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Media Group and WOLTERS KLUWER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLTERS KLUWER ADR 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 WOLTERS KLUWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLTERS KLUWER ADR has no effect on the direction of Nexstar Media i.e., Nexstar Media and WOLTERS KLUWER go up and down completely randomly.

Pair Corralation between Nexstar Media and WOLTERS KLUWER

Assuming the 90 days horizon Nexstar Media Group is expected to under-perform the WOLTERS KLUWER. In addition to that, Nexstar Media is 1.02 times more volatile than WOLTERS KLUWER ADR. It trades about -0.12 of its total potential returns per unit of risk. WOLTERS KLUWER ADR is currently generating about 0.24 per unit of volatility. If you would invest  15,800  in WOLTERS KLUWER ADR on October 26, 2024 and sell it today you would earn a total of  1,100  from holding WOLTERS KLUWER ADR or generate 6.96% return on investment over 90 days.

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

Nexstar Media Group  vs.  WOLTERS KLUWER ADR

Nexstar Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

WOLTERS KLUWER ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WOLTERS KLUWER ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WOLTERS KLUWER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nexstar Media and WOLTERS KLUWER

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

The idea behind Nexstar Media Group and WOLTERS KLUWER ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.