Correlation Between Insteel Industries and Lion One
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Lion One Metals, you can compare the effects of market volatilities on Insteel Industries and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Lion One.
Diversification Opportunities for Insteel Industries and Lion One
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insteel and Lion is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Insteel Industries i.e., Insteel Industries and Lion One go up and down completely randomly.
Pair Corralation between Insteel Industries and Lion One
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.56 times more return on investment than Lion One. However, Insteel Industries is 1.79 times less risky than Lion One. It trades about 0.02 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest 2,727 in Insteel Industries on September 14, 2024 and sell it today you would earn a total of 218.00 from holding Insteel Industries or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Insteel Industries vs. Lion One Metals
Performance |
| Timeline |
| Insteel Industries |
| Lion One Metals |
Insteel Industries and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Lion One
The main advantage of trading using opposite Insteel Industries and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One'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 |
| Lion One vs. Advantage Solutions | Lion One vs. Atlas Corp | Lion One vs. PureCycle Technologies | Lion One vs. WM Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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