Correlation Between Canadian Utilities and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Insteel Industries, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Insteel Industries.
Diversification Opportunities for Canadian Utilities and Insteel Industries
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Insteel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Canadian Utilities 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 Canadian Utilities Limited 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 Canadian Utilities i.e., Canadian Utilities and Insteel Industries go up and down completely randomly.
Pair Corralation between Canadian Utilities and Insteel Industries
Assuming the 90 days horizon Canadian Utilities is expected to generate 5.19 times less return on investment than Insteel Industries. But when comparing it to its historical volatility, Canadian Utilities Limited is 1.82 times less risky than Insteel Industries. It trades about 0.01 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,541 in Insteel Industries on November 5, 2024 and sell it today you would earn a total of 239.00 from holding Insteel Industries or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Insteel Industries
Performance |
| Timeline |
| Canadian Utilities |
| Insteel Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Canadian Utilities and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Insteel Industries
The main advantage of trading using opposite Canadian Utilities and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. Iberdrola SA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. Dominion Energy |
| Insteel Industries vs. CORNISH METALS INC | Insteel Industries vs. SEKISUI CHEMICAL | Insteel Industries vs. TRI CHEMICAL LABORATINC | Insteel Industries vs. Scandinavian Tobacco Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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