Correlation Between Nexstar Broadcasting and Tribune Media

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

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

Diversification Opportunities for Nexstar Broadcasting and Tribune Media

0.0

Correlation Coefficient

Nexstar Broadcasting  Tribune Media

Pay attention - limited upside

The 3 months correlation between Nexstar and Tribune is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Tribune Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tribune Media and Nexstar Broadcasting 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 Nexstar Broadcasting Group are associated (or correlated) with Tribune Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tribune Media has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and Tribune Media go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Tribune Media

If you would invest  14,373  in Nexstar Broadcasting Group on January 29, 2024 and sell it today you would earn a total of  1,519  from holding Nexstar Broadcasting Group or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Tribune Media

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.

Tribune Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tribune Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Tribune Media is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nexstar Broadcasting and Tribune Media

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

The idea behind Nexstar Broadcasting Group and Tribune Media 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.