Correlation Between Insteel Industries and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Martin Marietta 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 Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Martin Marietta Materials, you can compare the effects of market volatilities on Insteel Industries and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Martin Marietta.
Diversification Opportunities for Insteel Industries and Martin Marietta
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insteel and Martin is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Insteel Industries i.e., Insteel Industries and Martin Marietta go up and down completely randomly.
Pair Corralation between Insteel Industries and Martin Marietta
Assuming the 90 days horizon Insteel Industries is expected to generate 1.65 times more return on investment than Martin Marietta. However, Insteel Industries is 1.65 times more volatile than Martin Marietta Materials. It trades about 0.22 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.14 per unit of risk. If you would invest 2,477 in Insteel Industries on September 5, 2024 and sell it today you would earn a total of 303.00 from holding Insteel Industries or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Insteel Industries vs. Martin Marietta Materials
Performance |
| Timeline |
| Insteel Industries |
| Martin Marietta Materials |
Insteel Industries and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Martin Marietta
The main advantage of trading using opposite Insteel Industries and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Insteel Industries vs. thyssenkrupp AG | Insteel Industries vs. Superior Plus Corp | Insteel Industries vs. NMI Holdings | Insteel Industries vs. Origin Agritech |
| Martin Marietta vs. Insteel Industries | Martin Marietta vs. BLUESCOPE STEEL | Martin Marietta vs. KINGBOARD CHEMICAL | Martin Marietta vs. CECO ENVIRONMENTAL |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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