Correlation Between BANCO and Nexstar Broadcasting

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

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

Diversification Opportunities for BANCO and Nexstar Broadcasting

0.42

Correlation Coefficient

BANCO  Nexstar Broadcasting

Very weak diversification

The 3 months correlation between BANCO and Nexstar is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and BANCO 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 BANCO SANTANDER SA 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 BANCO i.e., BANCO and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between BANCO and Nexstar Broadcasting

Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to under-perform the Nexstar Broadcasting. But the bond apears to be less risky and, when comparing its historical volatility, BANCO SANTANDER SA is 1.77 times less risky than Nexstar Broadcasting. The bond trades about -0.29 of its potential returns per unit of risk. The Nexstar Broadcasting Group is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  15,993  in Nexstar Broadcasting Group on October 25, 2024 and sell it today you would lose (523.00) from holding Nexstar Broadcasting Group or give up 3.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

BANCO SANTANDER SA  vs.  Nexstar Broadcasting Group

BANCO SANTANDER SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The current 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BANCO and Nexstar Broadcasting

The main advantage of trading using opposite BANCO and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANCO 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 BANCO SANTANDER SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.