Correlation Between Insteel Industries and APPLE HOSPITALITY
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and APPLE HOSPITALITY 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 APPLE HOSPITALITY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and APPLE HOSPITALITY REIT, you can compare the effects of market volatilities on Insteel Industries and APPLE HOSPITALITY 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 APPLE HOSPITALITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and APPLE HOSPITALITY.
Diversification Opportunities for Insteel Industries and APPLE HOSPITALITY
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Insteel and APPLE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and APPLE HOSPITALITY REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE HOSPITALITY REIT 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 APPLE HOSPITALITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE HOSPITALITY REIT has no effect on the direction of Insteel Industries i.e., Insteel Industries and APPLE HOSPITALITY go up and down completely randomly.
Pair Corralation between Insteel Industries and APPLE HOSPITALITY
Assuming the 90 days horizon Insteel Industries is expected to under-perform the APPLE HOSPITALITY. In addition to that, Insteel Industries is 1.46 times more volatile than APPLE HOSPITALITY REIT. It trades about -0.01 of its total potential returns per unit of risk. APPLE HOSPITALITY REIT is currently generating about 0.02 per unit of volatility. If you would invest 1,461 in APPLE HOSPITALITY REIT on September 5, 2024 and sell it today you would earn a total of 67.00 from holding APPLE HOSPITALITY REIT or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Insteel Industries vs. APPLE HOSPITALITY REIT
Performance |
| Timeline |
| Insteel Industries |
| APPLE HOSPITALITY REIT |
Insteel Industries and APPLE HOSPITALITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and APPLE HOSPITALITY
The main advantage of trading using opposite Insteel Industries and APPLE HOSPITALITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, APPLE HOSPITALITY 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 APPLE HOSPITALITY will offset losses from the drop in APPLE HOSPITALITY's long position.| Insteel Industries vs. thyssenkrupp AG | Insteel Industries vs. Superior Plus Corp | Insteel Industries vs. NMI Holdings | Insteel Industries vs. Origin Agritech |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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