Correlation Between Tredegar and Worthington Industries
Can any of the company-specific risk be diversified away by investing in both Tredegar 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 Tredegar and Worthington Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tredegar and Worthington Industries, you can compare the effects of market volatilities on Tredegar 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 Tredegar with a short position of Worthington Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tredegar and Worthington Industries.
Diversification Opportunities for Tredegar and Worthington Industries
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tredegar and Worthington is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tredegar and Worthington Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Industries and Tredegar 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 Tredegar 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 Tredegar i.e., Tredegar and Worthington Industries go up and down completely randomly.
Pair Corralation between Tredegar and Worthington Industries
Allowing for the 90-day total investment horizon Tredegar is expected to under-perform the Worthington Industries. In addition to that, Tredegar is 1.87 times more volatile than Worthington Industries. It trades about -0.04 of its total potential returns per unit of risk. Worthington Industries is currently generating about 0.05 per unit of volatility. If you would invest 3,879 in Worthington Industries on August 24, 2024 and sell it today you would earn a total of 78.00 from holding Worthington Industries or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tredegar vs. Worthington Industries
Performance |
| Timeline |
| Tredegar |
| Worthington Industries |
Tredegar and Worthington Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tredegar and Worthington Industries
The main advantage of trading using opposite Tredegar and Worthington Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tredegar 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.| Tredegar vs. Northwest Pipe | Tredegar vs. Insteel Industries | Tredegar vs. Ryerson Holding Corp | Tredegar vs. Haynes International |
| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. Haynes International | Worthington Industries vs. ESAB Corp | Worthington Industries 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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