Correlation Between Salem Media and Spanish Broadcasting

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

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

Diversification Opportunities for Salem Media and Spanish Broadcasting

0.0

Correlation Coefficient

Salem Media  Spanish Broadcasting

Pay attention - limited upside

The 3 months correlation between Salem and Spanish is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salem Media Group and Spanish Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spanish Broadcasting and Salem 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 Salem Media Group are associated (or correlated) with Spanish Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spanish Broadcasting has no effect on the direction of Salem Media i.e., Salem Media and Spanish Broadcasting go up and down completely randomly.

Pair Corralation between Salem Media and Spanish Broadcasting

If you would invest (100.00) in Spanish Broadcasting System on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Spanish Broadcasting System or generate -100.0% return on investment over 90 days.

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

Salem Media Group  vs.  Spanish Broadcasting System

Salem Media Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salem Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salem Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Spanish Broadcasting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spanish Broadcasting System has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spanish Broadcasting is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salem Media and Spanish Broadcasting

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

The idea behind Salem Media Group and Spanish Broadcasting System 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.