Correlation Between Scientific Games and Nexstar Media

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

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

Diversification Opportunities for Scientific Games and Nexstar Media

0.75

Correlation Coefficient

Scientific Games  Nexstar Media

Poor diversification

The 3 months correlation between Scientific and Nexstar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Nexstar Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Media Group and Scientific Games 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 Scientific Games are associated (or correlated) with Nexstar Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Media Group has no effect on the direction of Scientific Games i.e., Scientific Games and Nexstar Media go up and down completely randomly.

Pair Corralation between Scientific Games and Nexstar Media

Assuming the 90 days horizon Scientific Games is expected to generate 1.02 times more return on investment than Nexstar Media. However, Scientific Games is 1.02 times more volatile than Nexstar Media Group. It trades about 0.05 of its potential returns per unit of risk. Nexstar Media Group is currently generating about 0.01 per unit of risk. If you would invest  5,600  in Scientific Games on October 4, 2024 and sell it today you would earn a total of  2,500  from holding Scientific Games or generate 44.64% return on investment over 90 days.

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

Scientific Games  vs.  Nexstar Media Group

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nexstar Media Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Media Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Nexstar Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Scientific Games and Nexstar Media

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

The idea behind Scientific Games and Nexstar Media 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..