Correlation Between Emmis Communications and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both Emmis Communications and Cumulus 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 Emmis Communications and Cumulus Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmis Communications Corp and Cumulus Media Class, you can compare the effects of market volatilities on Emmis Communications and Cumulus 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 Emmis Communications with a short position of Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmis Communications and Cumulus Media.
Diversification Opportunities for Emmis Communications and Cumulus Media
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emmis and Cumulus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Emmis Communications Corp and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class and Emmis Communications 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 Emmis Communications Corp are associated (or correlated) with Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Emmis Communications i.e., Emmis Communications and Cumulus Media go up and down completely randomly.
Pair Corralation between Emmis Communications and Cumulus Media
Given the investment horizon of 90 days Emmis Communications Corp is expected to generate 2.4 times more return on investment than Cumulus Media. However, Emmis Communications is 2.4 times more volatile than Cumulus Media Class. It trades about 0.09 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.07 per unit of risk. If you would invest 175.00 in Emmis Communications Corp on January 24, 2024 and sell it today you would earn a total of 215.00 from holding Emmis Communications Corp or generate 122.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.07% |
| Values | Daily Returns |
Emmis Communications Corp vs. Cumulus Media Class
Performance |
| Timeline |
| Emmis Communications Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cumulus Media Class |
Emmis Communications and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmis Communications and Cumulus Media
The main advantage of trading using opposite Emmis Communications and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmis Communications position performs unexpectedly, Cumulus 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 Cumulus Media will offset losses from the drop in Cumulus Media's long position.| Emmis Communications vs. RTL Group SA | Emmis Communications vs. ITV plc | Emmis Communications vs. ITV PLC ADR | Emmis Communications vs. iHeartMedia |
| Cumulus Media vs. News Corp B | Cumulus Media vs. Liberty Media | Cumulus Media vs. Marcus | Cumulus Media vs. Madison Square Garden |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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