Correlation Between Insteel Industries and Upbound
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Upbound 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 Upbound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Upbound Group, you can compare the effects of market volatilities on Insteel Industries and Upbound 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 Upbound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Upbound.
Diversification Opportunities for Insteel Industries and Upbound
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insteel and Upbound is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of Insteel Industries i.e., Insteel Industries and Upbound go up and down completely randomly.
Pair Corralation between Insteel Industries and Upbound
Given the investment horizon of 90 days Insteel Industries is expected to generate 3.91 times less return on investment than Upbound. In addition to that, Insteel Industries is 1.01 times more volatile than Upbound Group. It trades about 0.0 of its total potential returns per unit of risk. Upbound Group is currently generating about 0.02 per unit of volatility. If you would invest 3,210 in Upbound Group on September 12, 2024 and sell it today you would earn a total of 161.00 from holding Upbound Group or generate 5.02% 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. Upbound Group
Performance |
| Timeline |
| Insteel Industries |
| Upbound Group |
Insteel Industries and Upbound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Upbound
The main advantage of trading using opposite Insteel Industries and Upbound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Upbound 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 Upbound will offset losses from the drop in Upbound'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 |
| Upbound vs. Sanyo Special Steel | Upbound vs. CECO Environmental Corp | Upbound vs. The Gap, | Upbound 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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