Correlation Between Insteel Industries and American Copper
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and American Copper 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 American Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and American Copper Development, you can compare the effects of market volatilities on Insteel Industries and American Copper 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 American Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and American Copper.
Diversification Opportunities for Insteel Industries and American Copper
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insteel and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and American Copper Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Copper Deve 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 American Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Copper Deve has no effect on the direction of Insteel Industries i.e., Insteel Industries and American Copper go up and down completely randomly.
Pair Corralation between Insteel Industries and American Copper
Given the investment horizon of 90 days Insteel Industries is expected to generate 31.85 times less return on investment than American Copper. But when comparing it to its historical volatility, Insteel Industries is 8.56 times less risky than American Copper. It trades about 0.02 of its potential returns per unit of risk. American Copper Development is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20.00 in American Copper Development on August 28, 2024 and sell it today you would lose (17.00) from holding American Copper Development or give up 85.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.46% |
| Values | Daily Returns |
Insteel Industries vs. American Copper Development
Performance |
| Timeline |
| Insteel Industries |
| American Copper Deve |
Insteel Industries and American Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and American Copper
The main advantage of trading using opposite Insteel Industries and American Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, American Copper 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 American Copper will offset losses from the drop in American Copper's long position.| Insteel Industries vs. Haynes International | Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp |
| American Copper vs. Legacy Education | American Copper vs. NVIDIA | American Copper vs. Apple Inc | American Copper vs. Microsoft |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |