Correlation Between Tegna and Saga Communications

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

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

Diversification Opportunities for Tegna and Saga Communications

-0.04

Correlation Coefficient

Tegna  Saga Communications

Good diversification

The 3 months correlation between Tegna and Saga is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tegna Inc and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications and Tegna 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 Tegna Inc are associated (or correlated) with Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of Tegna i.e., Tegna and Saga Communications go up and down completely randomly.

Pair Corralation between Tegna and Saga Communications

Given the investment horizon of 90 days Tegna Inc is expected to under-perform the Saga Communications. But the stock apears to be less risky and, when comparing its historical volatility, Tegna Inc is 1.07 times less risky than Saga Communications. The stock trades about -0.04 of its potential returns per unit of risk. The Saga Communications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,104  in Saga Communications on December 2, 2024 and sell it today you would earn a total of  21.00  from holding Saga Communications or generate 1.9% return on investment over 90 days.

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

Tegna Inc  vs.  Saga Communications

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 somewhat strong basic indicators, Tegna is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Saga Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saga Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 Tegna and Saga Communications

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

The idea behind Tegna Inc and Saga Communications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.