Correlation Between Insteel Industries and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Citizens Financial 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 Insteel Industries and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Citizens Financial Group, you can compare the effects of market volatilities on Insteel Industries and Citizens Financial 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 Insteel Industries with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Citizens Financial.
Diversification Opportunities for Insteel Industries and Citizens Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Insteel and Citizens is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Insteel Industries 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 Insteel Industries are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Insteel Industries i.e., Insteel Industries and Citizens Financial go up and down completely randomly.
Pair Corralation between Insteel Industries and Citizens Financial
Assuming the 90 days horizon Insteel Industries is expected to generate 1.7 times less return on investment than Citizens Financial. In addition to that, Insteel Industries is 1.04 times more volatile than Citizens Financial Group. It trades about 0.02 of its total potential returns per unit of risk. Citizens Financial Group is currently generating about 0.04 per unit of volatility. If you would invest 3,354 in Citizens Financial Group on August 29, 2024 and sell it today you would earn a total of 1,247 from holding Citizens Financial Group or generate 37.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Citizens Financial Group
Performance |
| Timeline |
| Insteel Industries |
| Citizens Financial |
Insteel Industries and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Citizens Financial
The main advantage of trading using opposite Insteel Industries and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Insteel Industries vs. FAST RETAIL ADR | Insteel Industries vs. COSTCO WHOLESALE CDR | Insteel Industries vs. MARKET VECTR RETAIL | Insteel Industries vs. Costco Wholesale Corp |
| Citizens Financial vs. Cars Inc | Citizens Financial vs. Motorcar Parts of | Citizens Financial vs. REINET INVESTMENTS SCA | Citizens Financial vs. PennyMac Mortgage Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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