Correlation Between Insteel Industries and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and BLUESCOPE STEEL 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 BLUESCOPE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and BLUESCOPE STEEL, you can compare the effects of market volatilities on Insteel Industries and BLUESCOPE STEEL 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 BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and BLUESCOPE STEEL.
Diversification Opportunities for Insteel Industries and BLUESCOPE STEEL
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insteel and BLUESCOPE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL 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 BLUESCOPE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUESCOPE STEEL has no effect on the direction of Insteel Industries i.e., Insteel Industries and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between Insteel Industries and BLUESCOPE STEEL
Assuming the 90 days horizon Insteel Industries is expected to generate 0.81 times more return on investment than BLUESCOPE STEEL. However, Insteel Industries is 1.24 times less risky than BLUESCOPE STEEL. It trades about 0.23 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.07 per unit of risk. If you would invest 2,540 in Insteel Industries on August 29, 2024 and sell it today you would earn a total of 340.00 from holding Insteel Industries or generate 13.39% 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. BLUESCOPE STEEL
Performance |
| Timeline |
| Insteel Industries |
| BLUESCOPE STEEL |
Insteel Industries and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and BLUESCOPE STEEL
The main advantage of trading using opposite Insteel Industries and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, BLUESCOPE STEEL 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 BLUESCOPE STEEL will offset losses from the drop in BLUESCOPE STEEL'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 |
| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
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.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |