Correlation Between E W and IHeartMedia

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

By analyzing existing cross correlation between E W Scripps and iHeartMedia, you can compare the effects of market volatilities on E W and IHeartMedia 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 E W with a short position of IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of E W and IHeartMedia.

Diversification Opportunities for E W and IHeartMedia

0.49

Correlation Coefficient

E W  IHeartMedia

Very weak diversification

The 3 months correlation between SSP and IHeartMedia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding E W Scripps and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia and E W 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 E W Scripps are associated (or correlated) with IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia has no effect on the direction of E W i.e., E W and IHeartMedia go up and down completely randomly.

Pair Corralation between E W and IHeartMedia

Considering the 90-day investment horizon E W Scripps is expected to under-perform the IHeartMedia. In addition to that, E W is 1.31 times more volatile than iHeartMedia. It trades about -0.21 of its total potential returns per unit of risk. iHeartMedia is currently generating about -0.21 per unit of volatility. If you would invest  215.00  in iHeartMedia on December 2, 2024 and sell it today you would lose (64.00) from holding iHeartMedia or give up 29.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.02%
Values	Daily Returns

E W Scripps  vs.  iHeartMedia

E W Scripps

Risk-Adjusted Performance

Very Weak

Over the last 90 days E W Scripps has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

iHeartMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days iHeartMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with E W and IHeartMedia

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

The idea behind E W Scripps and iHeartMedia 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.