Correlation Between Northwest Pipe and Worthington Industries
Can any of the company-specific risk be diversified away by investing in both Northwest Pipe and Worthington 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 Northwest Pipe and Worthington Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Pipe and Worthington Industries, you can compare the effects of market volatilities on Northwest Pipe and Worthington 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 Northwest Pipe with a short position of Worthington Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Pipe and Worthington Industries.
Diversification Opportunities for Northwest Pipe and Worthington Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northwest and Worthington is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Pipe and Worthington Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Industries and Northwest Pipe 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 Northwest Pipe are associated (or correlated) with Worthington Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Industries has no effect on the direction of Northwest Pipe i.e., Northwest Pipe and Worthington Industries go up and down completely randomly.
Pair Corralation between Northwest Pipe and Worthington Industries
Given the investment horizon of 90 days Northwest Pipe is expected to generate 0.92 times more return on investment than Worthington Industries. However, Northwest Pipe is 1.08 times less risky than Worthington Industries. It trades about 0.04 of its potential returns per unit of risk. Worthington Industries is currently generating about 0.03 per unit of risk. If you would invest 3,645 in Northwest Pipe on October 20, 2024 and sell it today you would earn a total of 1,333 from holding Northwest Pipe or generate 36.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Pipe vs. Worthington Industries
Performance |
| Timeline |
| Northwest Pipe |
| Worthington Industries |
Northwest Pipe and Worthington Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Pipe and Worthington Industries
The main advantage of trading using opposite Northwest Pipe and Worthington Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Pipe position performs unexpectedly, Worthington 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 Worthington Industries will offset losses from the drop in Worthington Industries' long position.| Northwest Pipe vs. Insteel Industries | Northwest Pipe vs. Carpenter Technology | Northwest Pipe vs. ESAB Corp | Northwest Pipe vs. Gulf Island Fabrication |
| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel Industries | Worthington Industries vs. Mayville Engineering Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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