Correlation Between CN MODERN and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Insteel Industries, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Insteel Industries.
Diversification Opportunities for CN MODERN and Insteel Industries
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between 07M and Insteel is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and Insteel Industries go up and down completely randomly.
Pair Corralation between CN MODERN and Insteel Industries
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.37 times more return on investment than Insteel Industries. However, CN MODERN is 1.37 times more volatile than Insteel Industries. It trades about 0.08 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.01 per unit of risk. If you would invest 7.60 in CN MODERN DAIRY on September 19, 2024 and sell it today you would earn a total of 2.40 from holding CN MODERN DAIRY or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Insteel Industries
Performance |
| Timeline |
| CN MODERN DAIRY |
| Insteel Industries |
CN MODERN and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Insteel Industries
The main advantage of trading using opposite CN MODERN and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.| CN MODERN vs. New Residential Investment | CN MODERN vs. MGIC INVESTMENT | CN MODERN vs. ETFS Coffee ETC | CN MODERN vs. VARIOUS EATERIES LS |
| Insteel Industries vs. thyssenkrupp AG | Insteel Industries vs. thyssenkrupp AG | Insteel Industries vs. Mueller Industries |
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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