Correlation Between Insteel Industries and PS Business
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and PS Business 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 PS Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and PS Business Parks, you can compare the effects of market volatilities on Insteel Industries and PS Business 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 PS Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and PS Business.
Diversification Opportunities for Insteel Industries and PS Business
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insteel and PSBXP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and PS Business Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS Business Parks 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 PS Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS Business Parks has no effect on the direction of Insteel Industries i.e., Insteel Industries and PS Business go up and down completely randomly.
Pair Corralation between Insteel Industries and PS Business
Given the investment horizon of 90 days Insteel Industries is expected to generate 2.22 times less return on investment than PS Business. But when comparing it to its historical volatility, Insteel Industries is 1.62 times less risky than PS Business. It trades about 0.02 of its potential returns per unit of risk. PS Business Parks is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,341 in PS Business Parks on September 14, 2024 and sell it today you would earn a total of 59.00 from holding PS Business Parks or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.89% |
| Values | Daily Returns |
Insteel Industries vs. PS Business Parks
Performance |
| Timeline |
| Insteel Industries |
| PS Business Parks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Insteel Industries and PS Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and PS Business
The main advantage of trading using opposite Insteel Industries and PS Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, PS Business 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 PS Business will offset losses from the drop in PS Business' long position.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| PS Business vs. Insteel Industries | PS Business vs. Afya | PS Business vs. Sun Country Airlines | PS Business vs. Cumulus Media Class |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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