Correlation Between INGERSOLL and Nexstar Broadcasting

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

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

Diversification Opportunities for INGERSOLL and Nexstar Broadcasting

0.63

Correlation Coefficient

INGERSOLL  Nexstar Broadcasting

Poor diversification

The 3 months correlation between INGERSOLL and Nexstar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding INGERSOLL RAND GLOBAL HLDG and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG 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 INGERSOLL i.e., INGERSOLL and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between INGERSOLL and Nexstar Broadcasting

Assuming the 90 days trading horizon INGERSOLL RAND GLOBAL HLDG is expected to under-perform the Nexstar Broadcasting. But the bond apears to be less risky and, when comparing its historical volatility, INGERSOLL RAND GLOBAL HLDG is 2.01 times less risky than Nexstar Broadcasting. The bond trades about -0.15 of its potential returns per unit of risk. The Nexstar Broadcasting Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  16,595  in Nexstar Broadcasting Group on September 19, 2024 and sell it today you would lose (449.00) from holding Nexstar Broadcasting Group or give up 2.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	49.21%
Values	Daily Returns

INGERSOLL RAND GLOBAL HLDG  vs.  Nexstar Broadcasting Group

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGERSOLL RAND GLOBAL HLDG 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INGERSOLL and Nexstar Broadcasting

The main advantage of trading using opposite INGERSOLL and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.