Correlation Between Insteel Industries and Weyco

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

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

Diversification Opportunities for Insteel Industries and Weyco

0.15

Correlation Coefficient

Insteel Industries  Weyco

Average diversification

The 3 months correlation between Insteel and Weyco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Insteel Industries i.e., Insteel Industries and Weyco go up and down completely randomly.

Pair Corralation between Insteel Industries and Weyco

Given the investment horizon of 90 days Insteel Industries is expected to generate 7.83 times less return on investment than Weyco. But when comparing it to its historical volatility, Insteel Industries is 1.01 times less risky than Weyco. It trades about 0.01 of its potential returns per unit of risk. Weyco Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,171  in Weyco Group on September 30, 2024 and sell it today you would earn a total of  1,551  from holding Weyco Group or generate 71.44% return on investment over 90 days.

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

Insteel Industries  vs.  Weyco Group

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.

Weyco Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Insteel Industries and Weyco

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

The idea behind Insteel Industries and Weyco Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.