Correlation Between TAKIX and Nexstar Broadcasting

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

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

Diversification Opportunities for TAKIX and Nexstar Broadcasting

0.48

Correlation Coefficient

TAKIX  Nexstar Broadcasting

Very weak diversification

The 3 months correlation between TAKIX and Nexstar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding TAKIX and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and TAKIX 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 TAKIX 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 TAKIX i.e., TAKIX and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between TAKIX and Nexstar Broadcasting

Assuming the 90 days horizon TAKIX is expected to generate 0.03 times more return on investment than Nexstar Broadcasting. However, TAKIX is 30.06 times less risky than Nexstar Broadcasting. It trades about -0.4 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about -0.23 per unit of risk. If you would invest  858.00  in TAKIX on October 10, 2024 and sell it today you would lose (3.00) from holding TAKIX or give up 0.35% of portfolio value over 90 days.

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

TAKIX  vs.  Nexstar Broadcasting Group

TAKIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAKIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, TAKIX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TAKIX and Nexstar Broadcasting

The main advantage of trading using opposite TAKIX and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAKIX 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 TAKIX 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.