Correlation Between International Consolidated and NL Industries
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Companies and NL Industries, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and NL Industries.
Diversification Opportunities for International Consolidated and NL Industries
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and NL Industries is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and International Consolidated 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 International Consolidated Companies 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 International Consolidated i.e., International Consolidated and NL Industries go up and down completely randomly.
Pair Corralation between International Consolidated and NL Industries
Given the investment horizon of 90 days International Consolidated Companies is expected to generate 88.63 times more return on investment than NL Industries. However, International Consolidated is 88.63 times more volatile than NL Industries. It trades about 0.29 of its potential returns per unit of risk. NL Industries is currently generating about 0.07 per unit of risk. If you would invest 20.00 in International Consolidated Companies on September 25, 2024 and sell it today you would lose (17.00) from holding International Consolidated Companies or give up 85.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Com vs. NL Industries
Performance |
| Timeline |
| International Consolidated |
| NL Industries |
International Consolidated and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and NL Industries
The main advantage of trading using opposite International Consolidated and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Cintas | International Consolidated vs. Thomson Reuters Corp | International Consolidated vs. Global Payments | International Consolidated vs. Wolters Kluwer NV |
| NL Industries vs. International Consolidated Companies | NL Industries vs. Frontera Group | NL Industries vs. All American Pet | NL Industries vs. XCPCNL Business Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |