Correlation Between Idaho Strategic and Universal Stainless

Can any of the company-specific risk be diversified away by investing in both Idaho Strategic and Universal Stainless 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 Idaho Strategic and Universal Stainless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Idaho Strategic Resources and Universal Stainless Alloy, you can compare the effects of market volatilities on Idaho Strategic and Universal Stainless 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 Idaho Strategic with a short position of Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idaho Strategic and Universal Stainless.

Diversification Opportunities for Idaho Strategic and Universal Stainless

-0.47

Correlation Coefficient

Idaho Strategic  Universal Stainless

Very good diversification

The 3 months correlation between Idaho and Universal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Idaho Strategic Resources and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy and Idaho Strategic 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 Idaho Strategic Resources are associated (or correlated) with Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of Idaho Strategic i.e., Idaho Strategic and Universal Stainless go up and down completely randomly.

Pair Corralation between Idaho Strategic and Universal Stainless

Considering the 90-day investment horizon Idaho Strategic Resources is expected to under-perform the Universal Stainless. In addition to that, Idaho Strategic is 10.99 times more volatile than Universal Stainless Alloy. It trades about -0.26 of its total potential returns per unit of risk. Universal Stainless Alloy is currently generating about -0.09 per unit of volatility. If you would invest  4,422  in Universal Stainless Alloy on October 10, 2024 and sell it today you would lose (22.00) from holding Universal Stainless Alloy or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Idaho Strategic Resources  vs.  Universal Stainless Alloy

Idaho Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idaho Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Universal Stainless Alloy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Idaho Strategic and Universal Stainless

The main advantage of trading using opposite Idaho Strategic and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idaho Strategic position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.

The idea behind Idaho Strategic Resources and Universal Stainless Alloy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.