Correlation Between Insteel Industries and REGAL HOTEL
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and REGAL HOTEL 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 REGAL HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and REGAL HOTEL INTL, you can compare the effects of market volatilities on Insteel Industries and REGAL HOTEL 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 REGAL HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and REGAL HOTEL.
Diversification Opportunities for Insteel Industries and REGAL HOTEL
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insteel and REGAL is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL INTL 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 REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of Insteel Industries i.e., Insteel Industries and REGAL HOTEL go up and down completely randomly.
Pair Corralation between Insteel Industries and REGAL HOTEL
Assuming the 90 days horizon Insteel Industries is expected to generate 0.9 times more return on investment than REGAL HOTEL. However, Insteel Industries is 1.11 times less risky than REGAL HOTEL. It trades about 0.02 of its potential returns per unit of risk. REGAL HOTEL INTL is currently generating about -0.01 per unit of risk. If you would invest 2,246 in Insteel Industries on October 11, 2024 and sell it today you would earn a total of 254.00 from holding Insteel Industries or generate 11.31% 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. REGAL HOTEL INTL
Performance |
| Timeline |
| Insteel Industries |
| REGAL HOTEL INTL |
Insteel Industries and REGAL HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and REGAL HOTEL
The main advantage of trading using opposite Insteel Industries and REGAL HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, REGAL HOTEL 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 REGAL HOTEL will offset losses from the drop in REGAL HOTEL's long position.| Insteel Industries vs. INVITATION HOMES DL | Insteel Industries vs. Zoom Video Communications | Insteel Industries vs. Tencent Music Entertainment | Insteel Industries vs. alstria office REIT AG |
| REGAL HOTEL vs. Insteel Industries | REGAL HOTEL vs. Constellation Software | REGAL HOTEL vs. Unity Software | REGAL HOTEL vs. Magic Software Enterprises |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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