Correlation Between Insteel Industries and Getty Realty

Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Getty Realty 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 Getty Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Insteel Industries and Getty Realty, you can compare the effects of market volatilities on Insteel Industries and Getty Realty 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 Getty Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Getty Realty.

Diversification Opportunities for Insteel Industries and Getty Realty

0.35

Correlation Coefficient

Insteel Industries  Getty Realty

Weak diversification

The 3 months correlation between Insteel and Getty is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Getty Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Realty 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 Getty Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Realty has no effect on the direction of Insteel Industries i.e., Insteel Industries and Getty Realty go up and down completely randomly.

Pair Corralation between Insteel Industries and Getty Realty

Given the investment horizon of 90 days Insteel Industries is expected to under-perform the Getty Realty. In addition to that, Insteel Industries is 1.78 times more volatile than Getty Realty. It trades about -0.03 of its total potential returns per unit of risk. Getty Realty is currently generating about 0.04 per unit of volatility. If you would invest  2,675  in Getty Realty on October 3, 2024 and sell it today you would earn a total of  338.00  from holding Getty Realty or generate 12.64% return on investment over 90 days.

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

Insteel Industries  vs.  Getty Realty

Insteel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Insteel Industries and Getty Realty

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

The idea behind Insteel Industries and Getty Realty 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.