Correlation Between Yellow Pages and Gannett

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

By analyzing existing cross correlation between Yellow Pages Limited and Gannett Co, you can compare the effects of market volatilities on Yellow Pages and Gannett 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 Yellow Pages with a short position of Gannett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and Gannett.

Diversification Opportunities for Yellow Pages and Gannett

-0.31

Correlation Coefficient

Yellow Pages  Gannett

Very good diversification

The 3 months correlation between Yellow and Gannett is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Gannett Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gannett and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with Gannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gannett has no effect on the direction of Yellow Pages i.e., Yellow Pages and Gannett go up and down completely randomly.

Pair Corralation between Yellow Pages and Gannett

Assuming the 90 days horizon Yellow Pages is expected to generate 11.91 times less return on investment than Gannett. But when comparing it to its historical volatility, Yellow Pages Limited is 1.04 times less risky than Gannett. It trades about 0.0 of its potential returns per unit of risk. Gannett Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  235.00  in Gannett Co on October 4, 2024 and sell it today you would earn a total of  274.50  from holding Gannett Co or generate 116.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.12%
Values	Daily Returns

Yellow Pages Limited  vs.  Gannett Co

Yellow Pages Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Yellow Pages and Gannett

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

The idea behind Yellow Pages Limited and Gannett Co 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.