Correlation Between Insteel Industries and Hyster Yale

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

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

Diversification Opportunities for Insteel Industries and Hyster Yale

-0.54

Correlation Coefficient

Insteel Industries  Hyster Yale

Excellent diversification

The 3 months correlation between Insteel and Hyster is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Insteel Industries i.e., Insteel Industries and Hyster Yale go up and down completely randomly.

Pair Corralation between Insteel Industries and Hyster Yale

Assuming the 90 days horizon Insteel Industries is expected to generate 0.72 times more return on investment than Hyster Yale. However, Insteel Industries is 1.39 times less risky than Hyster Yale. It trades about 0.0 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about -0.05 per unit of risk. If you would invest  2,774  in Insteel Industries on September 29, 2024 and sell it today you would lose (94.00) from holding Insteel Industries or give up 3.39% of portfolio value over 90 days.

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

Insteel Industries  vs.  Hyster Yale Materials Handling

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. Despite nearly stable basic indicators, Insteel Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Insteel Industries and Hyster Yale

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

The idea behind Insteel Industries and Hyster Yale Materials Handling 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.