Correlation Between CAVA Group, and NL Industries
Can any of the company-specific risk be diversified away by investing in both CAVA Group, 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 CAVA Group, and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and NL Industries, you can compare the effects of market volatilities on CAVA Group, 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 CAVA Group, with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and NL Industries.
Diversification Opportunities for CAVA Group, and NL Industries
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAVA and NL Industries is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and CAVA Group, 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 CAVA Group, 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 CAVA Group, i.e., CAVA Group, and NL Industries go up and down completely randomly.
Pair Corralation between CAVA Group, and NL Industries
Given the investment horizon of 90 days CAVA Group, is expected to generate 1.34 times less return on investment than NL Industries. But when comparing it to its historical volatility, CAVA Group, is 1.48 times less risky than NL Industries. It trades about 0.07 of its potential returns per unit of risk. NL Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 782.00 in NL Industries on August 28, 2024 and sell it today you would earn a total of 26.00 from holding NL Industries or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAVA Group, vs. NL Industries
Performance |
| Timeline |
| CAVA Group, |
| NL Industries |
CAVA Group, and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAVA Group, and NL Industries
The main advantage of trading using opposite CAVA Group, and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, 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.| CAVA Group, vs. Warner Music Group | CAVA Group, vs. Meli Hotels International | CAVA Group, vs. SunOpta | CAVA Group, vs. Marfrig Global Foods |
| NL Industries vs. Park Electrochemical | NL Industries vs. Innovative Solutions and | NL Industries vs. Curtiss Wright | NL Industries vs. National Presto Industries |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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