Correlation Between Insteel Industries and SOUTHWESTERN
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By analyzing existing cross correlation between Insteel Industries and SOUTHWESTERN ELEC PWR, you can compare the effects of market volatilities on Insteel Industries and SOUTHWESTERN 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 SOUTHWESTERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and SOUTHWESTERN.
Diversification Opportunities for Insteel Industries and SOUTHWESTERN
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Insteel and SOUTHWESTERN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and SOUTHWESTERN ELEC PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWESTERN ELEC PWR 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 SOUTHWESTERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHWESTERN ELEC PWR has no effect on the direction of Insteel Industries i.e., Insteel Industries and SOUTHWESTERN go up and down completely randomly.
Pair Corralation between Insteel Industries and SOUTHWESTERN
Given the investment horizon of 90 days Insteel Industries is expected to generate 3.47 times more return on investment than SOUTHWESTERN. However, Insteel Industries is 3.47 times more volatile than SOUTHWESTERN ELEC PWR. It trades about 0.01 of its potential returns per unit of risk. SOUTHWESTERN ELEC PWR is currently generating about 0.01 per unit of risk. If you would invest 3,060 in Insteel Industries on September 12, 2024 and sell it today you would lose (88.50) from holding Insteel Industries or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.22% |
| Values | Daily Returns |
Insteel Industries vs. SOUTHWESTERN ELEC PWR
Performance |
| Timeline |
| Insteel Industries |
| SOUTHWESTERN ELEC PWR |
Insteel Industries and SOUTHWESTERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and SOUTHWESTERN
The main advantage of trading using opposite Insteel Industries and SOUTHWESTERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, SOUTHWESTERN 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 SOUTHWESTERN will offset losses from the drop in SOUTHWESTERN'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 |
| SOUTHWESTERN vs. Insteel Industries | SOUTHWESTERN vs. Allegheny Technologies Incorporated | SOUTHWESTERN vs. Ironveld Plc | SOUTHWESTERN vs. Merit Medical Systems |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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