Correlation Between Worthington Industries and Mueller Industries

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

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

Diversification Opportunities for Worthington Industries and Mueller Industries

-0.43

Correlation Coefficient

Worthington Industries  Mueller Industries

Very good diversification

The 3 months correlation between Worthington and Mueller is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries and Worthington 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 Worthington Industries are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Worthington Industries i.e., Worthington Industries and Mueller Industries go up and down completely randomly.

Pair Corralation between Worthington Industries and Mueller Industries

Considering the 90-day investment horizon Worthington Industries is expected to generate 1.31 times more return on investment than Mueller Industries. However, Worthington Industries is 1.31 times more volatile than Mueller Industries. It trades about 0.05 of its potential returns per unit of risk. Mueller Industries is currently generating about 0.0 per unit of risk. If you would invest  4,074  in Worthington Industries on November 28, 2024 and sell it today you would earn a total of  189.00  from holding Worthington Industries or generate 4.64% return on investment over 90 days.

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

Worthington Industries  vs.  Mueller Industries

Worthington Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Worthington Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Worthington Industries may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Mueller Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mueller Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Mueller Industries is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Worthington Industries and Mueller Industries

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

The idea behind Worthington Industries and Mueller 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.