Correlation Between NL Industries and Carters
Can any of the company-specific risk be diversified away by investing in both NL Industries and Carters 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 Carters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Carters, you can compare the effects of market volatilities on NL Industries and Carters 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 Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Carters.
Diversification Opportunities for NL Industries and Carters
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NL Industries and Carters is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of NL Industries i.e., NL Industries and Carters go up and down completely randomly.
Pair Corralation between NL Industries and Carters
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.3 times more return on investment than Carters. However, NL Industries is 1.3 times more volatile than Carters. It trades about 0.03 of its potential returns per unit of risk. Carters is currently generating about 0.0 per unit of risk. If you would invest 672.00 in NL Industries on January 31, 2024 and sell it today you would earn a total of 125.00 from holding NL Industries or generate 18.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NL Industries vs. Carters
Performance |
Timeline |
NL Industries |
Carters |
NL Industries and Carters Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NL Industries and Carters
The main advantage of trading using opposite NL Industries and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.NL Industries vs. Avalon Holdings | NL Industries vs. LanzaTech Global | NL Industries vs. Ambipar Emergency Response | NL Industries vs. Houston Natural Resources |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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