Correlation Between Insteel Industries and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Mueller Industries 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 Mueller Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Mueller Industries, you can compare the effects of market volatilities on Insteel Industries and Mueller Industries 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Mueller Industries.
Diversification Opportunities for Insteel Industries and Mueller Industries
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insteel and Mueller is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries 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 Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Insteel Industries i.e., Insteel Industries and Mueller Industries go up and down completely randomly.
Pair Corralation between Insteel Industries and Mueller Industries
Given the investment horizon of 90 days Insteel Industries is expected to generate 1.24 times more return on investment than Mueller Industries. However, Insteel Industries is 1.24 times more volatile than Mueller Industries. It trades about 0.04 of its potential returns per unit of risk. Mueller Industries is currently generating about -0.08 per unit of risk. If you would invest 2,980 in Insteel Industries on November 18, 2024 and sell it today you would earn a total of 138.00 from holding Insteel Industries or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Mueller Industries
Performance |
| Timeline |
| Insteel Industries |
| Mueller Industries |
Insteel Industries and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Mueller Industries
The main advantage of trading using opposite Insteel Industries and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Mueller Industries 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| Mueller Industries vs. Insteel Industries | Mueller Industries vs. Carpenter Technology | Mueller Industries vs. Northwest Pipe | Mueller Industries vs. Ryerson Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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