Correlation Between Marine Products and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Marine Products and Insteel 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 Marine Products and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Products and Insteel Industries, you can compare the effects of market volatilities on Marine Products and Insteel 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 Marine Products with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and Insteel Industries.
Diversification Opportunities for Marine Products and Insteel Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Marine and Insteel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Marine Products 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 Marine Products are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Marine Products i.e., Marine Products and Insteel Industries go up and down completely randomly.
Pair Corralation between Marine Products and Insteel Industries
Considering the 90-day investment horizon Marine Products is expected to generate 1.18 times more return on investment than Insteel Industries. However, Marine Products is 1.18 times more volatile than Insteel Industries. It trades about 0.02 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.02 per unit of risk. If you would invest 935.00 in Marine Products on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Marine Products or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marine Products vs. Insteel Industries
Performance |
| Timeline |
| Marine Products |
| Insteel Industries |
Marine Products and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marine Products and Insteel Industries
The main advantage of trading using opposite Marine Products and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products position performs unexpectedly, Insteel 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Marine Products vs. LCI Industries | Marine Products vs. MCBC Holdings | Marine Products vs. Winnebago Industries | Marine Products vs. Thor Industries |
| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
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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