Correlation Between Insteel Industries and Energy East

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

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

Diversification Opportunities for Insteel Industries and Energy East

0.0

Correlation Coefficient

Insteel Industries  Energy East

Pay attention - limited upside

The 3 months correlation between Insteel and Energy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Energy East Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy East Corp 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 Energy East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy East Corp has no effect on the direction of Insteel Industries i.e., Insteel Industries and Energy East go up and down completely randomly.

Pair Corralation between Insteel Industries and Energy East

If you would invest  0.00  in Energy East Corp on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Energy East Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Insteel Industries  vs.  Energy East Corp

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 unsteady 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.

Energy East Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy East Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Energy East is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Insteel Industries and Energy East

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

The idea behind Insteel Industries and Energy East Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.