Correlation Between Insteel Industries and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both Insteel Industries 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 Insteel Industries and Cumulus Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Cumulus Media Class, you can compare the effects of market volatilities on Insteel Industries 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 Insteel Industries with a short position of Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Cumulus Media.
Diversification Opportunities for Insteel Industries and Cumulus Media
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insteel and Cumulus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries 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 Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and Cumulus Media go up and down completely randomly.
Pair Corralation between Insteel Industries and Cumulus Media
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.46 times more return on investment than Cumulus Media. However, Insteel Industries is 2.16 times less risky than Cumulus Media. It trades about 0.17 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.15 per unit of risk. If you would invest 2,722 in Insteel Industries on September 2, 2024 and sell it today you would earn a total of 226.00 from holding Insteel Industries or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Cumulus Media Class
Performance |
| Timeline |
| Insteel Industries |
| Cumulus Media Class |
Insteel Industries and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Cumulus Media
The main advantage of trading using opposite Insteel Industries and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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