Correlation Between NL Industries and Carmit
Can any of the company-specific risk be diversified away by investing in both NL Industries and Carmit 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 NL Industries and Carmit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Carmit, you can compare the effects of market volatilities on NL Industries and Carmit 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 NL Industries with a short position of Carmit. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Carmit.
Diversification Opportunities for NL Industries and Carmit
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NL Industries and Carmit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit and NL 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 NL Industries are associated (or correlated) with Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of NL Industries i.e., NL Industries and Carmit go up and down completely randomly.
Pair Corralation between NL Industries and Carmit
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.44 times more return on investment than Carmit. However, NL Industries is 1.44 times more volatile than Carmit. It trades about 0.0 of its potential returns per unit of risk. Carmit is currently generating about -0.23 per unit of risk. If you would invest 772.00 in NL Industries on February 23, 2024 and sell it today you would lose (23.00) from holding NL Industries or give up 2.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 65.22% |
Values | Daily Returns |
NL Industries vs. Carmit
Performance |
Timeline |
NL Industries |
Carmit |
NL Industries and Carmit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NL Industries and Carmit
The main advantage of trading using opposite NL Industries and Carmit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Carmit 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 Carmit will offset losses from the drop in Carmit's long position.NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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