Correlation Between Gulf Island and Worthington Industries
Can any of the company-specific risk be diversified away by investing in both Gulf Island and Worthington 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 Worthington 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 Worthington Industries, you can compare the effects of market volatilities on Gulf Island and Worthington 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 Worthington Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Worthington Industries.
Diversification Opportunities for Gulf Island and Worthington Industries
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gulf and Worthington is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Worthington Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington 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 Worthington Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Industries has no effect on the direction of Gulf Island i.e., Gulf Island and Worthington Industries go up and down completely randomly.
Pair Corralation between Gulf Island and Worthington Industries
Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 1.62 times more return on investment than Worthington Industries. However, Gulf Island is 1.62 times more volatile than Worthington Industries. It trades about 0.29 of its potential returns per unit of risk. Worthington Industries is currently generating about 0.05 per unit of risk. If you would invest 547.00 in Gulf Island Fabrication on August 24, 2024 and sell it today you would earn a total of 163.00 from holding Gulf Island Fabrication or generate 29.8% 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. Worthington Industries
Performance |
| Timeline |
| Gulf Island Fabrication |
| Worthington Industries |
Gulf Island and Worthington Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Island and Worthington Industries
The main advantage of trading using opposite Gulf Island and Worthington Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, Worthington 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 Worthington Industries will offset losses from the drop in Worthington Industries' long position.| Gulf Island vs. Haynes International | Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp |
| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. Haynes International | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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