Correlation Between Insteel Industries and Ampco Pittsburgh
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Ampco Pittsburgh 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 Ampco Pittsburgh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Ampco Pittsburgh, you can compare the effects of market volatilities on Insteel Industries and Ampco Pittsburgh 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 Ampco Pittsburgh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Ampco Pittsburgh.
Diversification Opportunities for Insteel Industries and Ampco Pittsburgh
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insteel and Ampco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Ampco Pittsburgh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampco Pittsburgh 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 Ampco Pittsburgh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampco Pittsburgh has no effect on the direction of Insteel Industries i.e., Insteel Industries and Ampco Pittsburgh go up and down completely randomly.
Pair Corralation between Insteel Industries and Ampco Pittsburgh
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.68 times more return on investment than Ampco Pittsburgh. However, Insteel Industries is 1.47 times less risky than Ampco Pittsburgh. It trades about 0.26 of its potential returns per unit of risk. Ampco Pittsburgh is currently generating about -0.2 per unit of risk. If you would invest 2,699 in Insteel Industries on November 18, 2024 and sell it today you would earn a total of 419.00 from holding Insteel Industries or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Ampco Pittsburgh
Performance |
| Timeline |
| Insteel Industries |
| Ampco Pittsburgh |
Insteel Industries and Ampco Pittsburgh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Ampco Pittsburgh
The main advantage of trading using opposite Insteel Industries and Ampco Pittsburgh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Ampco Pittsburgh 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 Ampco Pittsburgh will offset losses from the drop in Ampco Pittsburgh's long position.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| Ampco Pittsburgh vs. Northwest Pipe | Ampco Pittsburgh vs. Insteel Industries | Ampco Pittsburgh vs. Carpenter Technology | Ampco Pittsburgh vs. ESAB Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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