Correlation Between Northwest Pipe and InfuSystems Holdings

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Can any of the company-specific risk be diversified away by investing in both Northwest Pipe and InfuSystems Holdings 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 Northwest Pipe and InfuSystems Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Pipe and InfuSystems Holdings, you can compare the effects of market volatilities on Northwest Pipe and InfuSystems Holdings 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 Northwest Pipe with a short position of InfuSystems Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Pipe and InfuSystems Holdings.

Diversification Opportunities for Northwest Pipe and InfuSystems Holdings

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Northwest and InfuSystems is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Pipe and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings and Northwest Pipe 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 Northwest Pipe are associated (or correlated) with InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Northwest Pipe i.e., Northwest Pipe and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between Northwest Pipe and InfuSystems Holdings

Given the investment horizon of 90 days Northwest Pipe is expected to generate 3.48 times less return on investment than InfuSystems Holdings. But when comparing it to its historical volatility, Northwest Pipe is 2.09 times less risky than InfuSystems Holdings. It trades about 0.06 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  478.00  in InfuSystems Holdings on May 5, 2025 and sell it today you would earn a total of  92.00  from holding InfuSystems Holdings or generate 19.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Northwest Pipe  vs.  InfuSystems Holdings

 Performance 
       Timeline  
Northwest Pipe 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Pipe are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Northwest Pipe is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
InfuSystems Holdings 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Northwest Pipe and InfuSystems Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northwest Pipe and InfuSystems Holdings

The main advantage of trading using opposite Northwest Pipe and InfuSystems Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Pipe position performs unexpectedly, InfuSystems Holdings 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 InfuSystems Holdings will offset losses from the drop in InfuSystems Holdings' long position.
The idea behind Northwest Pipe and InfuSystems Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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