Correlation Between Insteel Industries and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and WIMFARM SA 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 Insteel Industries and WIMFARM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and WIMFARM SA EO, you can compare the effects of market volatilities on Insteel Industries and WIMFARM SA 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 Insteel Industries with a short position of WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and WIMFARM SA.
Diversification Opportunities for Insteel Industries and WIMFARM SA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and WIMFARM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and Insteel 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 Insteel Industries are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Insteel Industries i.e., Insteel Industries and WIMFARM SA go up and down completely randomly.
Pair Corralation between Insteel Industries and WIMFARM SA
Assuming the 90 days horizon Insteel Industries is expected to under-perform the WIMFARM SA. But the stock apears to be less risky and, when comparing its historical volatility, Insteel Industries is 2.73 times less risky than WIMFARM SA. The stock trades about -0.02 of its potential returns per unit of risk. The WIMFARM SA EO is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 321.00 in WIMFARM SA EO on December 2, 2024 and sell it today you would earn a total of 48.00 from holding WIMFARM SA EO or generate 14.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Insteel Industries vs. WIMFARM SA EO
Performance |
Timeline |
Insteel Industries |
WIMFARM SA EO |
Insteel Industries and WIMFARM SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Insteel Industries and WIMFARM SA
The main advantage of trading using opposite Insteel Industries and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.Insteel Industries vs. United Rentals | Insteel Industries vs. CeoTronics AG | Insteel Industries vs. ALBIS LEASING AG | Insteel Industries vs. Algonquin Power Utilities |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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