Correlation Between Insteel Industries and City Of
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and City Of 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 City Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and The City of, you can compare the effects of market volatilities on Insteel Industries and City Of 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 City Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and City Of.
Diversification Opportunities for Insteel Industries and City Of
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insteel and City is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and The City of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The City 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 City Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The City has no effect on the direction of Insteel Industries i.e., Insteel Industries and City Of go up and down completely randomly.
Pair Corralation between Insteel Industries and City Of
Assuming the 90 days horizon Insteel Industries is expected to generate 1.83 times less return on investment than City Of. In addition to that, Insteel Industries is 1.51 times more volatile than The City of. It trades about 0.02 of its total potential returns per unit of risk. The City of is currently generating about 0.04 per unit of volatility. If you would invest 428.00 in The City of on August 28, 2024 and sell it today you would earn a total of 90.00 from holding The City of or generate 21.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Insteel Industries vs. The City of
Performance |
| Timeline |
| Insteel Industries |
| The City |
Insteel Industries and City Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and City Of
The main advantage of trading using opposite Insteel Industries and City Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, City Of 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 City Of will offset losses from the drop in City Of's long position.The idea behind Insteel Industries and The City of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| City Of vs. Spirent Communications plc | City Of vs. Iridium Communications | City Of vs. Highlight Communications AG | City Of vs. RYU Apparel |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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