Correlation Between PHINIA and Nexstar Broadcasting

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

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

Diversification Opportunities for PHINIA and Nexstar Broadcasting

0.06

Correlation Coefficient

PHINIA  Nexstar Broadcasting

Significant diversification

The 3 months correlation between PHINIA and Nexstar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PHINIA Inc and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and PHINIA 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 PHINIA Inc are associated (or correlated) with Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of PHINIA i.e., PHINIA and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between PHINIA and Nexstar Broadcasting

Given the investment horizon of 90 days PHINIA Inc is expected to generate 1.1 times more return on investment than Nexstar Broadcasting. However, PHINIA is 1.1 times more volatile than Nexstar Broadcasting Group. It trades about 0.12 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about -0.01 per unit of risk. If you would invest  2,907  in PHINIA Inc on October 24, 2024 and sell it today you would earn a total of  2,241  from holding PHINIA Inc or generate 77.09% return on investment over 90 days.

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

PHINIA Inc  vs.  Nexstar Broadcasting Group

PHINIA Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, PHINIA displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with PHINIA and Nexstar Broadcasting

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

The idea behind PHINIA Inc and Nexstar Broadcasting Group 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.