Correlation Between NBCUNIVERSAL and Insteel Industries

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

By analyzing existing cross correlation between NBCUNIVERSAL MEDIA LLC and Insteel Industries, you can compare the effects of market volatilities on NBCUNIVERSAL and Insteel Industries 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 NBCUNIVERSAL with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBCUNIVERSAL and Insteel Industries.

Diversification Opportunities for NBCUNIVERSAL and Insteel Industries

-0.56

Correlation Coefficient

NBCUNIVERSAL  Insteel Industries

Excellent diversification

The 3 months correlation between NBCUNIVERSAL and Insteel is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NBCUNIVERSAL MEDIA LLC and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of NBCUNIVERSAL i.e., NBCUNIVERSAL and Insteel Industries go up and down completely randomly.

Pair Corralation between NBCUNIVERSAL and Insteel Industries

Assuming the 90 days trading horizon NBCUNIVERSAL MEDIA LLC is expected to generate 47.16 times more return on investment than Insteel Industries. However, NBCUNIVERSAL is 47.16 times more volatile than Insteel Industries. It trades about 0.09 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.02 per unit of risk. If you would invest  10,792  in NBCUNIVERSAL MEDIA LLC on September 20, 2024 and sell it today you would lose (365.00) from holding NBCUNIVERSAL MEDIA LLC or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.7%
Values	Daily Returns

NBCUNIVERSAL MEDIA LLC  vs.  Insteel Industries

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NBCUNIVERSAL MEDIA LLC investors.

Insteel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NBCUNIVERSAL and Insteel Industries

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

The idea behind NBCUNIVERSAL MEDIA LLC and Insteel Industries 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.