Correlation Between NACCO Industries and IT Tech
Can any of the company-specific risk be diversified away by investing in both NACCO Industries and IT Tech 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 NACCO Industries and IT Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NACCO Industries and IT Tech Packaging, you can compare the effects of market volatilities on NACCO Industries and IT Tech 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 NACCO Industries with a short position of IT Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NACCO Industries and IT Tech.
Diversification Opportunities for NACCO Industries and IT Tech
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NACCO and ITP is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NACCO Industries and IT Tech Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT Tech Packaging and NACCO Industries 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 NACCO Industries are associated (or correlated) with IT Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT Tech Packaging has no effect on the direction of NACCO Industries i.e., NACCO Industries and IT Tech go up and down completely randomly.
Pair Corralation between NACCO Industries and IT Tech
Allowing for the 90-day total investment horizon NACCO Industries is expected to generate 0.51 times more return on investment than IT Tech. However, NACCO Industries is 1.98 times less risky than IT Tech. It trades about 0.12 of its potential returns per unit of risk. IT Tech Packaging is currently generating about 0.04 per unit of risk. If you would invest 2,712 in NACCO Industries on September 3, 2024 and sell it today you would earn a total of 509.00 from holding NACCO Industries or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NACCO Industries vs. IT Tech Packaging
Performance |
| Timeline |
| NACCO Industries |
| IT Tech Packaging |
NACCO Industries and IT Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NACCO Industries and IT Tech
The main advantage of trading using opposite NACCO Industries and IT Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NACCO Industries position performs unexpectedly, IT Tech 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 IT Tech will offset losses from the drop in IT Tech's long position.| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Consol Energy | NACCO Industries vs. Indo Tambangraya Megah |
| IT Tech vs. Mondi PLC ADR | IT Tech vs. Holmen AB ADR | IT Tech vs. Canfor Pulp Products | IT Tech vs. Nine Dragons Paper |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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