Correlation Between Nexstar Broadcasting and GMxico Transportes

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting and GMxico Transportes 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 GMxico Transportes 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 GMxico Transportes SAB, you can compare the effects of market volatilities on Nexstar Broadcasting and GMxico Transportes 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 GMxico Transportes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and GMxico Transportes.

Diversification Opportunities for Nexstar Broadcasting and GMxico Transportes

-0.26

Correlation Coefficient

Nexstar Broadcasting  GMxico Transportes

Very good diversification

The 3 months correlation between Nexstar and GMxico is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Nexstar Broadcasting i.e., Nexstar Broadcasting and GMxico Transportes go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and GMxico Transportes

Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 17.78 times less return on investment than GMxico Transportes. But when comparing it to its historical volatility, Nexstar Broadcasting Group is 1.73 times less risky than GMxico Transportes. It trades about 0.01 of its potential returns per unit of risk. GMxico Transportes SAB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  36.00  in GMxico Transportes SAB on August 23, 2024 and sell it today you would earn a total of  119.00  from holding GMxico Transportes SAB or generate 330.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  GMxico Transportes SAB

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 comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GMxico Transportes SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMxico Transportes SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nexstar Broadcasting and GMxico Transportes

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

The idea behind Nexstar Broadcasting Group and GMxico Transportes SAB 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.