Correlation Between Insteel Industries and 26442CAH7

Can any of the company-specific risk be diversified away by investing in both Insteel Industries and 26442CAH7 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 26442CAH7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Insteel Industries and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Insteel Industries and 26442CAH7 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 26442CAH7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and 26442CAH7.

Diversification Opportunities for Insteel Industries and 26442CAH7

0.01

Correlation Coefficient

Insteel Industries  26442CAH7

Significant diversification

The 3 months correlation between Insteel and 26442CAH7 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS 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 26442CAH7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of Insteel Industries i.e., Insteel Industries and 26442CAH7 go up and down completely randomly.

Pair Corralation between Insteel Industries and 26442CAH7

Given the investment horizon of 90 days Insteel Industries is expected to generate 2.18 times more return on investment than 26442CAH7. However, Insteel Industries is 2.18 times more volatile than DUKE ENERGY CAROLINAS. It trades about 0.02 of its potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about -0.1 per unit of risk. If you would invest  2,796  in Insteel Industries on December 25, 2024 and sell it today you would earn a total of  31.00  from holding Insteel Industries or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Insteel Industries  vs.  DUKE ENERGY CAROLINAS

Insteel Industries

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for DUKE ENERGY CAROLINAS investors.

Pair Trading with Insteel Industries and 26442CAH7

The main advantage of trading using opposite Insteel Industries and 26442CAH7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, 26442CAH7 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 26442CAH7 will offset losses from the drop in 26442CAH7's long position.

The idea behind Insteel Industries and DUKE ENERGY CAROLINAS 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.