Correlation Between Ziff Davis and Nexxen International

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

By analyzing existing cross correlation between Ziff Davis and Nexxen International, you can compare the effects of market volatilities on Ziff Davis and Nexxen International 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 Ziff Davis with a short position of Nexxen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ziff Davis and Nexxen International.

Diversification Opportunities for Ziff Davis and Nexxen International

0.56

Correlation Coefficient

Ziff Davis  Nexxen International

Very weak diversification

The 3 months correlation between Ziff and Nexxen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International and Ziff Davis 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 Ziff Davis are associated (or correlated) with Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Ziff Davis i.e., Ziff Davis and Nexxen International go up and down completely randomly.

Pair Corralation between Ziff Davis and Nexxen International

Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Nexxen International. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 1.58 times less risky than Nexxen International. The stock trades about -0.14 of its potential returns per unit of risk. The Nexxen International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Nexxen International on October 6, 2024 and sell it today you would earn a total of  30.00  from holding Nexxen International or generate 2.97% return on investment over 90 days.

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

Ziff Davis  vs.  Nexxen International

Ziff Davis

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nexxen International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ziff Davis and Nexxen International

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

The idea behind Ziff Davis and Nexxen International 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.