Correlation Between TrueBlue and Insteel Industries

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

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

Diversification Opportunities for TrueBlue and Insteel Industries

0.33

Correlation Coefficient

TrueBlue  Insteel Industries

Weak diversification

The 3 months correlation between TrueBlue and Insteel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding TrueBlue and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and TrueBlue 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 TrueBlue 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 TrueBlue i.e., TrueBlue and Insteel Industries go up and down completely randomly.

Pair Corralation between TrueBlue and Insteel Industries

Considering the 90-day investment horizon TrueBlue is expected to generate 2.49 times more return on investment than Insteel Industries. However, TrueBlue is 2.49 times more volatile than Insteel Industries. It trades about 0.19 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.04 per unit of risk. If you would invest  398.00  in TrueBlue on May 7, 2025 and sell it today you would earn a total of  236.00  from holding TrueBlue or generate 59.3% return on investment over 90 days.

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

TrueBlue  vs.  Insteel Industries

TrueBlue

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TrueBlue are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, TrueBlue demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Insteel Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TrueBlue and Insteel Industries

The main advantage of trading using opposite TrueBlue and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueBlue 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 TrueBlue 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.