Correlation Between Media Times and United Insurance

Can any of the company-specific risk be diversified away by investing in both Media Times and United Insurance 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 Media Times and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Media Times and United Insurance, you can compare the effects of market volatilities on Media Times and United Insurance 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 Media Times with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media Times and United Insurance.

Diversification Opportunities for Media Times and United Insurance

-0.05

Correlation Coefficient

Media Times  United Insurance

Good diversification

The 3 months correlation between Media and United is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Media Times and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance and Media Times 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 Media Times are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of Media Times i.e., Media Times and United Insurance go up and down completely randomly.

Pair Corralation between Media Times and United Insurance

Assuming the 90 days trading horizon Media Times is expected to generate 5.63 times more return on investment than United Insurance. However, Media Times is 5.63 times more volatile than United Insurance. It trades about 0.01 of its potential returns per unit of risk. United Insurance is currently generating about 0.0 per unit of risk. If you would invest  223.00  in Media Times on September 28, 2024 and sell it today you would lose (7.00) from holding Media Times or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Media Times  vs.  United Insurance

Media Times

Risk-Adjusted Performance

0 of 100

Very Weak

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

United Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, United Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Media Times and United Insurance

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

The idea behind Media Times and United Insurance 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.