Correlation Between Emmis Communications and RTL Group

Can any of the company-specific risk be diversified away by investing in both Emmis Communications and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Emmis Communications and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmis Communications and RTL Group.

Diversification Opportunities for Emmis Communications and RTL Group

-0.5

Correlation Coefficient

Emmis Communications  RTL Group

Very good diversification

The 3 months correlation between Emmis and RTL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Emmis Communications Corp and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Emmis Communications i.e., Emmis Communications and RTL Group go up and down completely randomly.

Pair Corralation between Emmis Communications and RTL Group

If you would invest  390.00  in Emmis Communications Corp on February 1, 2024 and sell it today you would earn a total of  0.00  from holding Emmis Communications Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Emmis Communications Corp  vs.  RTL Group SA

Emmis Communications Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmis Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Emmis Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, RTL Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emmis Communications and RTL Group

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

The idea behind Emmis Communications Corp and RTL Group SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.