Correlation Between Gulf Island and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both Gulf Island and Mueller 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 Gulf Island and Mueller Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Island Fabrication and Mueller Industries, you can compare the effects of market volatilities on Gulf Island and Mueller 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 Gulf Island with a short position of Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Mueller Industries.
Diversification Opportunities for Gulf Island and Mueller Industries
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gulf and Mueller is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Gulf Island i.e., Gulf Island and Mueller Industries go up and down completely randomly.
Pair Corralation between Gulf Island and Mueller Industries
Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 1.07 times more return on investment than Mueller Industries. However, Gulf Island is 1.07 times more volatile than Mueller Industries. It trades about 0.04 of its potential returns per unit of risk. Mueller Industries is currently generating about -0.08 per unit of risk. If you would invest 667.00 in Gulf Island Fabrication on November 18, 2024 and sell it today you would earn a total of 21.00 from holding Gulf Island Fabrication or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Island Fabrication vs. Mueller Industries
Performance |
| Timeline |
| Gulf Island Fabrication |
| Mueller Industries |
Gulf Island and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Island and Mueller Industries
The main advantage of trading using opposite Gulf Island and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, Mueller 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp | Gulf Island vs. Northwest Pipe |
| Mueller Industries vs. Insteel Industries | Mueller Industries vs. Carpenter Technology | Mueller Industries vs. Northwest Pipe | Mueller Industries vs. Ryerson Holding Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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