Correlation Between Pekin Life and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Pekin Life 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 Pekin Life and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pekin Life Insurance and Insteel Industries, you can compare the effects of market volatilities on Pekin Life 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 Pekin Life with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pekin Life and Insteel Industries.
Diversification Opportunities for Pekin Life and Insteel Industries
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pekin and Insteel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Pekin Life 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and Insteel Industries go up and down completely randomly.
Pair Corralation between Pekin Life and Insteel Industries
Given the investment horizon of 90 days Pekin Life Insurance is expected to generate 0.08 times more return on investment than Insteel Industries. However, Pekin Life Insurance is 12.5 times less risky than Insteel Industries. It trades about 0.09 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.0 per unit of risk. If you would invest 1,150 in Pekin Life Insurance on August 27, 2024 and sell it today you would earn a total of 25.00 from holding Pekin Life Insurance or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pekin Life Insurance vs. Insteel Industries
Performance |
| Timeline |
| Pekin Life Insurance |
| Insteel Industries |
Pekin Life and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pekin Life and Insteel Industries
The main advantage of trading using opposite Pekin Life and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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.| Pekin Life vs. FG Annuities Life | Pekin Life vs. MetLife Preferred Stock | Pekin Life vs. Brighthouse Financial | Pekin Life vs. MetLife Preferred Stock |
| Insteel Industries vs. Haynes International | Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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