Correlation Between DXP Enterprises and Now
Can any of the company-specific risk be diversified away by investing in both DXP Enterprises and Now 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 DXP Enterprises and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXP Enterprises and Now Inc, you can compare the effects of market volatilities on DXP Enterprises and Now 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 DXP Enterprises with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXP Enterprises and Now.
Diversification Opportunities for DXP Enterprises and Now
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DXP and Now is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding DXP Enterprises and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and DXP Enterprises 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 DXP Enterprises are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of DXP Enterprises i.e., DXP Enterprises and Now go up and down completely randomly.
Pair Corralation between DXP Enterprises and Now
Given the investment horizon of 90 days DXP Enterprises is expected to generate 77.77 times less return on investment than Now. But when comparing it to its historical volatility, DXP Enterprises is 1.92 times less risky than Now. It trades about 0.01 of its potential returns per unit of risk. Now Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,372 in Now Inc on November 18, 2024 and sell it today you would earn a total of 346.00 from holding Now Inc or generate 25.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXP Enterprises vs. Now Inc
Performance |
| Timeline |
| DXP Enterprises |
| Now Inc |
DXP Enterprises and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXP Enterprises and Now
The main advantage of trading using opposite DXP Enterprises and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXP Enterprises position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. EVI Industries | DXP Enterprises vs. Core Main | DXP Enterprises vs. Watsco Inc |
| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Enerflex |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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