Correlation Between Insteel Industries and Mayfair Gold
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Mayfair Gold 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 Mayfair Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Mayfair Gold Corp, you can compare the effects of market volatilities on Insteel Industries and Mayfair Gold 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 Mayfair Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Mayfair Gold.
Diversification Opportunities for Insteel Industries and Mayfair Gold
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and Mayfair is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Insteel Industries i.e., Insteel Industries and Mayfair Gold go up and down completely randomly.
Pair Corralation between Insteel Industries and Mayfair Gold
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.77 times more return on investment than Mayfair Gold. However, Insteel Industries is 1.3 times less risky than Mayfair Gold. It trades about -0.01 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 3,191 in Insteel Industries on August 30, 2024 and sell it today you would lose (160.00) from holding Insteel Industries or give up 5.01% 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. Mayfair Gold Corp
Performance |
| Timeline |
| Insteel Industries |
| Mayfair Gold Corp |
Insteel Industries and Mayfair Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Mayfair Gold
The main advantage of trading using opposite Insteel Industries and Mayfair Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Mayfair Gold 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 Mayfair Gold will offset losses from the drop in Mayfair Gold'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 |
| Mayfair Gold vs. Vertiv Holdings Co | Mayfair Gold vs. Nasdaq Inc | Mayfair Gold vs. McDonalds | Mayfair Gold vs. Walmart |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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