Correlation Between CoreCivic and NL Industries
Can any of the company-specific risk be diversified away by investing in both CoreCivic 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 CoreCivic and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CoreCivic and NL Industries, you can compare the effects of market volatilities on CoreCivic 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 CoreCivic with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreCivic and NL Industries.
Diversification Opportunities for CoreCivic and NL Industries
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CoreCivic and NL Industries is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and CoreCivic 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 CoreCivic 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 CoreCivic i.e., CoreCivic and NL Industries go up and down completely randomly.
Pair Corralation between CoreCivic and NL Industries
Considering the 90-day investment horizon CoreCivic is expected to generate 1.31 times less return on investment than NL Industries. In addition to that, CoreCivic is 1.05 times more volatile than NL Industries. It trades about 0.06 of its total potential returns per unit of risk. NL Industries is currently generating about 0.09 per unit of volatility. If you would invest 485.00 in NL Industries on September 14, 2024 and sell it today you would earn a total of 395.00 from holding NL Industries or generate 81.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CoreCivic vs. NL Industries
Performance |
| Timeline |
| CoreCivic |
| NL Industries |
CoreCivic and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CoreCivic and NL Industries
The main advantage of trading using opposite CoreCivic and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreCivic 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.| CoreCivic vs. ADT Inc | CoreCivic vs. NL Industries | CoreCivic vs. Mistras Group | CoreCivic vs. Evolv Technologies Holdings |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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