Correlation Between Insteel Industries and IBC Advanced
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and IBC Advanced 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 IBC Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and IBC Advanced Alloys, you can compare the effects of market volatilities on Insteel Industries and IBC Advanced 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 IBC Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and IBC Advanced.
Diversification Opportunities for Insteel Industries and IBC Advanced
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Insteel and IBC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and IBC Advanced Alloys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBC Advanced Alloys 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 IBC Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBC Advanced Alloys has no effect on the direction of Insteel Industries i.e., Insteel Industries and IBC Advanced go up and down completely randomly.
Pair Corralation between Insteel Industries and IBC Advanced
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.48 times more return on investment than IBC Advanced. However, Insteel Industries is 2.07 times less risky than IBC Advanced. It trades about -0.26 of its potential returns per unit of risk. IBC Advanced Alloys is currently generating about -0.22 per unit of risk. If you would invest 3,092 in Insteel Industries on September 24, 2024 and sell it today you would lose (260.00) from holding Insteel Industries or give up 8.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Insteel Industries vs. IBC Advanced Alloys
Performance |
| Timeline |
| Insteel Industries |
| IBC Advanced Alloys |
Insteel Industries and IBC Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and IBC Advanced
The main advantage of trading using opposite Insteel Industries and IBC Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, IBC Advanced 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 IBC Advanced will offset losses from the drop in IBC Advanced'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 |
| IBC Advanced vs. ESAB Corp | IBC Advanced vs. Worthington Industries | IBC Advanced vs. Allegheny Technologies Incorporated | IBC Advanced vs. Insteel Industries |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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