Correlation Between Insteel Industries and Continental
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Continental 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 Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Camden Property Trust, you can compare the effects of market volatilities on Insteel Industries and Continental 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 Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Continental.
Diversification Opportunities for Insteel Industries and Continental
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insteel and Continental is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Insteel Industries i.e., Insteel Industries and Continental go up and down completely randomly.
Pair Corralation between Insteel Industries and Continental
Assuming the 90 days horizon Insteel Industries is expected to under-perform the Continental. In addition to that, Insteel Industries is 1.39 times more volatile than Camden Property Trust. It trades about -0.12 of its total potential returns per unit of risk. Camden Property Trust is currently generating about -0.17 per unit of volatility. If you would invest 11,692 in Camden Property Trust on October 26, 2024 and sell it today you would lose (992.00) from holding Camden Property Trust or give up 8.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Camden Property Trust
Performance |
| Timeline |
| Insteel Industries |
| Camden Property Trust |
Insteel Industries and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Continental
The main advantage of trading using opposite Insteel Industries and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Insteel Industries vs. Ultra Clean Holdings | Insteel Industries vs. Canadian Utilities Limited | Insteel Industries vs. GAZTRTECHNIUADR15EO01 | Insteel Industries vs. BioNTech SE |
| Continental vs. Insteel Industries | Continental vs. CALTAGIRONE EDITORE | Continental vs. ANGANG STEEL H | Continental vs. Computershare Limited |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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