Correlation Between Insteel Industries and INGERSOLL

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

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

Diversification Opportunities for Insteel Industries and INGERSOLL

0.25

Correlation Coefficient

Insteel Industries  INGERSOLL

Modest diversification

The 3 months correlation between Insteel and INGERSOLL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Insteel Industries i.e., Insteel Industries and INGERSOLL go up and down completely randomly.

Pair Corralation between Insteel Industries and INGERSOLL

Given the investment horizon of 90 days Insteel Industries is expected to generate 335.71 times less return on investment than INGERSOLL. But when comparing it to its historical volatility, Insteel Industries is 25.43 times less risky than INGERSOLL. It trades about 0.0 of its potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,610  in INGERSOLL RAND GLOBAL HLDG on September 26, 2024 and sell it today you would earn a total of  63.00  from holding INGERSOLL RAND GLOBAL HLDG or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.37%
Values	Daily Returns

Insteel Industries  vs.  INGERSOLL RAND GLOBAL HLDG

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.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Insteel Industries and INGERSOLL

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

The idea behind Insteel Industries and INGERSOLL RAND GLOBAL HLDG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.