Correlation Between RTL Group and TEGNA

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

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

Diversification Opportunities for RTL Group and TEGNA

-0.57

Correlation Coefficient

RTL Group  TEGNA

Excellent diversification

The 3 months correlation between RTL and TEGNA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and TEGNA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEGNA Inc and RTL Group 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 RTL Group SA are associated (or correlated) with TEGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEGNA Inc has no effect on the direction of RTL Group i.e., RTL Group and TEGNA go up and down completely randomly.

Pair Corralation between RTL Group and TEGNA

Assuming the 90 days trading horizon RTL Group SA is expected to generate 0.65 times more return on investment than TEGNA. However, RTL Group SA is 1.53 times less risky than TEGNA. It trades about 0.24 of its potential returns per unit of risk. TEGNA Inc is currently generating about -0.05 per unit of risk. If you would invest  2,940  in RTL Group SA on December 2, 2024 and sell it today you would earn a total of  225.00  from holding RTL Group SA or generate 7.65% return on investment over 90 days.

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

RTL Group SA  vs.  TEGNA Inc

RTL Group SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RTL Group reported solid returns over the last few months and may actually be approaching a breakup point.

TEGNA Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with RTL Group and TEGNA

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

The idea behind RTL Group SA and TEGNA 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 Transaction History module to view history of all your transactions and understand their impact on performance.