Correlation Between BRC and NL Industries
Can any of the company-specific risk be diversified away by investing in both BRC and NL 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 BRC and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and NL Industries, you can compare the effects of market volatilities on BRC and NL 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 BRC with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and NL Industries.
Diversification Opportunities for BRC and NL Industries
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BRC and NL Industries is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and BRC 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 BRC Inc are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of BRC i.e., BRC and NL Industries go up and down completely randomly.
Pair Corralation between BRC and NL Industries
Given the investment horizon of 90 days BRC Inc is expected to under-perform the NL Industries. In addition to that, BRC is 1.1 times more volatile than NL Industries. It trades about -0.14 of its total potential returns per unit of risk. NL Industries is currently generating about 0.15 per unit of volatility. If you would invest 631.00 in NL Industries on September 4, 2024 and sell it today you would earn a total of 180.00 from holding NL Industries or generate 28.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRC Inc vs. NL Industries
Performance |
| Timeline |
| BRC Inc |
| NL Industries |
BRC and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and NL Industries
The main advantage of trading using opposite BRC and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, NL 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 NL Industries will offset losses from the drop in NL Industries' long position.The idea behind BRC Inc and NL 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.| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |