Correlation Between Direct Digital and Salem Media

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

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

Diversification Opportunities for Direct Digital and Salem Media

0.65

Correlation Coefficient

Direct Digital  Salem Media

Poor diversification

The 3 months correlation between Direct and Salem is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Salem Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salem Media Group and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Salem Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salem Media Group has no effect on the direction of Direct Digital i.e., Direct Digital and Salem Media go up and down completely randomly.

Pair Corralation between Direct Digital and Salem Media

Given the investment horizon of 90 days Direct Digital Holdings is expected to under-perform the Salem Media. In addition to that, Direct Digital is 2.0 times more volatile than Salem Media Group. It trades about -0.06 of its total potential returns per unit of risk. Salem Media Group is currently generating about -0.01 per unit of volatility. If you would invest  88.00  in Salem Media Group on July 31, 2025 and sell it today you would lose (6.00) from holding Salem Media Group or give up 6.82% of portfolio value over 90 days.

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

Direct Digital Holdings  vs.  Salem Media Group

Direct Digital Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in November 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Salem Media Group

Risk-Adjusted Performance

Weakest

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

Pair Trading with Direct Digital and Salem Media

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

The idea behind Direct Digital Holdings and Salem 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.