Correlation Between Cable One and Clear Channel

Can any of the company-specific risk be diversified away by investing in both Cable One and Clear Channel 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 Cable One and Clear Channel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cable One and Clear Channel Outdoor, you can compare the effects of market volatilities on Cable One and Clear Channel 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 Cable One with a short position of Clear Channel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Clear Channel.

Diversification Opportunities for Cable One and Clear Channel

0.62

Correlation Coefficient

Cable One  Clear Channel

Poor diversification

The 3 months correlation between Cable and Clear is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Clear Channel Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Channel Outdoor and Cable One 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 Cable One are associated (or correlated) with Clear Channel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Channel Outdoor has no effect on the direction of Cable One i.e., Cable One and Clear Channel go up and down completely randomly.

Pair Corralation between Cable One and Clear Channel

Given the investment horizon of 90 days Cable One is expected to under-perform the Clear Channel. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 1.58 times less risky than Clear Channel. The stock trades about -0.21 of its potential returns per unit of risk. The Clear Channel Outdoor is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Clear Channel Outdoor on January 26, 2024 and sell it today you would lose (47.00) from holding Clear Channel Outdoor or give up 24.61% of portfolio value over 90 days.

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

Cable One  vs.  Clear Channel Outdoor

Cable One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Clear Channel Outdoor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Channel Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cable One and Clear Channel

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

The idea behind Cable One and Clear Channel Outdoor 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.