Correlation Between WOLTERS KLUWER and Nexstar Media

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

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

Diversification Opportunities for WOLTERS KLUWER and Nexstar Media

-0.04

Correlation Coefficient

WOLTERS KLUWER  Nexstar Media

Good diversification

The 3 months correlation between WOLTERS and Nexstar is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding WOLTERS KLUWER ADR 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 WOLTERS KLUWER 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 WOLTERS KLUWER ADR 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 WOLTERS KLUWER i.e., WOLTERS KLUWER and Nexstar Media go up and down completely randomly.

Pair Corralation between WOLTERS KLUWER and Nexstar Media

Assuming the 90 days horizon WOLTERS KLUWER ADR is expected to generate 0.77 times more return on investment than Nexstar Media. However, WOLTERS KLUWER ADR is 1.3 times less risky than Nexstar Media. It trades about -0.03 of its potential returns per unit of risk. Nexstar Media Group is currently generating about -0.05 per unit of risk. If you would invest  16,000  in WOLTERS KLUWER ADR on October 11, 2024 and sell it today you would lose (100.00) from holding WOLTERS KLUWER ADR or give up 0.62% of portfolio value over 90 days.

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

WOLTERS KLUWER ADR  vs.  Nexstar Media Group

WOLTERS KLUWER ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WOLTERS KLUWER ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WOLTERS KLUWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nexstar Media Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Media Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nexstar Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WOLTERS KLUWER and Nexstar Media

The main advantage of trading using opposite WOLTERS KLUWER and Nexstar Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOLTERS KLUWER 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 WOLTERS KLUWER ADR 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 Global Correlations module to find global opportunities by holding instruments from different markets.