Correlation Between Insteel Industries and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Babcock Wilcox 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 Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Insteel Industries and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Babcock Wilcox.
Diversification Opportunities for Insteel Industries and Babcock Wilcox
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and Babcock is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Insteel Industries i.e., Insteel Industries and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Insteel Industries and Babcock Wilcox
Given the investment horizon of 90 days Insteel Industries is expected to under-perform the Babcock Wilcox. In addition to that, Insteel Industries is 1.34 times more volatile than Babcock Wilcox Enterprises. It trades about -0.08 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.03 per unit of volatility. If you would invest 2,145 in Babcock Wilcox Enterprises on September 14, 2024 and sell it today you would lose (15.00) from holding Babcock Wilcox Enterprises or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Insteel Industries |
| Babcock Wilcox Enter |
Insteel Industries and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Babcock Wilcox
The main advantage of trading using opposite Insteel Industries and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox'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 |
| Babcock Wilcox vs. Harmony Gold Mining | Babcock Wilcox vs. Insteel Industries | Babcock Wilcox vs. Coupang LLC | Babcock Wilcox vs. Getty Realty |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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