Correlation Between Valneva SE and Insteel Industries

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

By analyzing existing cross correlation between Valneva SE ADR and Insteel Industries, you can compare the effects of market volatilities on Valneva SE and Insteel Industries 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 Valneva SE with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Insteel Industries.

Diversification Opportunities for Valneva SE and Insteel Industries

-0.03

Correlation Coefficient

Valneva SE  Insteel Industries

Good diversification

The 3 months correlation between Valneva and Insteel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Valneva SE 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 Valneva SE ADR are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Valneva SE i.e., Valneva SE and Insteel Industries go up and down completely randomly.

Pair Corralation between Valneva SE and Insteel Industries

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Insteel Industries. In addition to that, Valneva SE is 1.23 times more volatile than Insteel Industries. It trades about -0.24 of its total potential returns per unit of risk. Insteel Industries is currently generating about -0.06 per unit of volatility. If you would invest  3,274  in Insteel Industries on September 17, 2024 and sell it today you would lose (313.00) from holding Insteel Industries or give up 9.56% of portfolio value over 90 days.

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

Valneva SE ADR  vs.  Insteel Industries

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Valneva SE and Insteel Industries

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

The idea behind Valneva SE ADR and Insteel Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.