Correlation Between Gray Television and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both Gray Television and Nexstar Broadcasting 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 Gray Television and Nexstar Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gray Television and Nexstar Broadcasting Group, you can compare the effects of market volatilities on Gray Television and Nexstar Broadcasting 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 Gray Television with a short position of Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gray Television and Nexstar Broadcasting.
Diversification Opportunities for Gray Television and Nexstar Broadcasting
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gray and Nexstar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting and Gray Television 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 Gray Television are associated (or correlated) with Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Gray Television i.e., Gray Television and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between Gray Television and Nexstar Broadcasting
Considering the 90-day investment horizon Gray Television is expected to generate 2.6 times more return on investment than Nexstar Broadcasting. However, Gray Television is 2.6 times more volatile than Nexstar Broadcasting Group. It trades about 0.18 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.2 per unit of risk. If you would invest 388.00 in Gray Television on June 9, 2025 and sell it today you would earn a total of 224.00 from holding Gray Television or generate 57.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gray Television vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| Gray Television |
| Nexstar Broadcasting |
Gray Television and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gray Television and Nexstar Broadcasting
The main advantage of trading using opposite Gray Television and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gray Television position performs unexpectedly, Nexstar Broadcasting 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 Nexstar Broadcasting will offset losses from the drop in Nexstar Broadcasting's long position.| Gray Television vs. E W Scripps | Gray Television vs. Gray Television | Gray Television vs. Tegna Inc | Gray Television vs. iHeartMedia Class A |
| Nexstar Broadcasting vs. E W Scripps | Nexstar Broadcasting vs. Tegna Inc | Nexstar Broadcasting vs. iHeartMedia Class A |
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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.
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