Correlation Between Cable One and Beasley Broadcast

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

By analyzing existing cross correlation between Cable One and Beasley Broadcast Group, you can compare the effects of market volatilities on Cable One and Beasley Broadcast 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 Beasley Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Beasley Broadcast.

Diversification Opportunities for Cable One and Beasley Broadcast

0.86

Correlation Coefficient

Cable One  Beasley Broadcast

Very poor diversification

The 3 months correlation between Cable and Beasley is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Beasley Broadcast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beasley Broadcast 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 Beasley Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beasley Broadcast has no effect on the direction of Cable One i.e., Cable One and Beasley Broadcast go up and down completely randomly.

Pair Corralation between Cable One and Beasley Broadcast

Given the investment horizon of 90 days Cable One is expected to generate 0.6 times more return on investment than Beasley Broadcast. However, Cable One is 1.67 times less risky than Beasley Broadcast. It trades about -0.17 of its potential returns per unit of risk. Beasley Broadcast Group is currently generating about -0.21 per unit of risk. If you would invest  43,868  in Cable One on January 24, 2024 and sell it today you would lose (3,177) from holding Cable One or give up 7.24% of portfolio value over 90 days.

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

Cable One  vs.  Beasley Broadcast Group

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 weak 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.

Beasley Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beasley Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cable One and Beasley Broadcast

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

The idea behind Cable One and Beasley Broadcast Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.