Correlation Between E W and Gray Television

Can any of the company-specific risk be diversified away by investing in both E W and Gray Television 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 E W and Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E W Scripps and Gray Television, you can compare the effects of market volatilities on E W and Gray Television 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 E W with a short position of Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of E W and Gray Television.

Diversification Opportunities for E W and Gray Television

0.86

Correlation Coefficient

E W  Gray Television

Very poor diversification

The 3 months correlation between SSP and Gray is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding E W Scripps and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television and E W 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 E W Scripps are associated (or correlated) with Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of E W i.e., E W and Gray Television go up and down completely randomly.

Pair Corralation between E W and Gray Television

Considering the 90-day investment horizon E W Scripps is expected to generate 2.07 times more return on investment than Gray Television. However, E W is 2.07 times more volatile than Gray Television. It trades about 0.18 of its potential returns per unit of risk. Gray Television is currently generating about 0.34 per unit of risk. If you would invest  313.00  in E W Scripps on February 14, 2024 and sell it today you would earn a total of  65.00  from holding E W Scripps or generate 20.77% return on investment over 90 days.

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

E W Scripps  vs.  Gray Television

E W Scripps

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E W Scripps has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gray Television

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gray Television has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with E W and Gray Television

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

The idea behind E W Scripps and Gray Television 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.