Correlation Between Worthington Industries and Gulf Island
Can any of the company-specific risk be diversified away by investing in both Worthington Industries and Gulf Island 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 Worthington Industries and Gulf Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Industries and Gulf Island Fabrication, you can compare the effects of market volatilities on Worthington Industries and Gulf Island 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 Worthington Industries with a short position of Gulf Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Industries and Gulf Island.
Diversification Opportunities for Worthington Industries and Gulf Island
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Worthington and Gulf is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Gulf Island Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Island Fabrication and Worthington 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 Worthington Industries are associated (or correlated) with Gulf Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Island Fabrication has no effect on the direction of Worthington Industries i.e., Worthington Industries and Gulf Island go up and down completely randomly.
Pair Corralation between Worthington Industries and Gulf Island
Considering the 90-day investment horizon Worthington Industries is expected to generate 1.58 times less return on investment than Gulf Island. But when comparing it to its historical volatility, Worthington Industries is 1.32 times less risky than Gulf Island. It trades about 0.03 of its potential returns per unit of risk. Gulf Island Fabrication is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 509.00 in Gulf Island Fabrication on August 27, 2024 and sell it today you would earn a total of 185.00 from holding Gulf Island Fabrication or generate 36.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worthington Industries vs. Gulf Island Fabrication
Performance |
| Timeline |
| Worthington Industries |
| Gulf Island Fabrication |
Worthington Industries and Gulf Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Industries and Gulf Island
The main advantage of trading using opposite Worthington Industries and Gulf Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Industries position performs unexpectedly, Gulf Island 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 Gulf Island will offset losses from the drop in Gulf Island's long position.| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. Haynes International | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel Industries |
| Gulf Island vs. Haynes International | Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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