Correlation Between Schnitzer Steel and Insulet

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

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

Diversification Opportunities for Schnitzer Steel and Insulet

0.53

Correlation Coefficient

Schnitzer Steel  Insulet

Very weak diversification

The 3 months correlation between Schnitzer and Insulet is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Schnitzer Steel Industries and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet and Schnitzer Steel 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 Schnitzer Steel Industries are associated (or correlated) with Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Schnitzer Steel i.e., Schnitzer Steel and Insulet go up and down completely randomly.

Pair Corralation between Schnitzer Steel and Insulet

Assuming the 90 days trading horizon Schnitzer Steel is expected to generate 7.86 times less return on investment than Insulet. But when comparing it to its historical volatility, Schnitzer Steel Industries is 4.34 times less risky than Insulet. It trades about 0.02 of its potential returns per unit of risk. Insulet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  22,770  in Insulet on April 24, 2025 and sell it today you would earn a total of  1,330  from holding Insulet or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.5%
Values	Daily Returns

Schnitzer Steel Industries  vs.  Insulet

Schnitzer Steel Indu

Risk-Adjusted Performance

Weak

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

Insulet

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Schnitzer Steel and Insulet

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

The idea behind Schnitzer Steel Industries and Insulet 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.