Correlation Between Insteel Industries and Wal-Mart
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Wal-Mart 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 Wal-Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Wal Mart de Mxico, you can compare the effects of market volatilities on Insteel Industries and Wal-Mart 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 Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Wal-Mart.
Diversification Opportunities for Insteel Industries and Wal-Mart
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insteel and Wal-Mart is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de 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 Wal-Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Insteel Industries i.e., Insteel Industries and Wal-Mart go up and down completely randomly.
Pair Corralation between Insteel Industries and Wal-Mart
Assuming the 90 days horizon Insteel Industries is expected to under-perform the Wal-Mart. But the stock apears to be less risky and, when comparing its historical volatility, Insteel Industries is 3.39 times less risky than Wal-Mart. The stock trades about -0.01 of its potential returns per unit of risk. The Wal Mart de Mxico is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Wal Mart de Mxico on December 4, 2024 and sell it today you would earn a total of 106.00 from holding Wal Mart de Mxico or generate 70.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Wal Mart de Mxico
Performance |
| Timeline |
| Insteel Industries |
| Wal Mart de |
Insteel Industries and Wal-Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Wal-Mart
The main advantage of trading using opposite Insteel Industries and Wal-Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Wal-Mart 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 Wal-Mart will offset losses from the drop in Wal-Mart's long position.| Insteel Industries vs. Ryanair Holdings plc | Insteel Industries vs. GRENKELEASING Dusseldorf | Insteel Industries vs. Air New Zealand | Insteel Industries vs. Enter Air SA |
| Wal-Mart vs. CORNISH METALS INC | Wal-Mart vs. Kaufman Broad SA | Wal-Mart vs. NAGOYA RAILROAD | Wal-Mart vs. QUEEN S ROAD |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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