Correlation Between NACCO Industries and TerraCom
Can any of the company-specific risk be diversified away by investing in both NACCO Industries and TerraCom 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 TerraCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NACCO Industries and TerraCom Limited, you can compare the effects of market volatilities on NACCO Industries and TerraCom 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 TerraCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NACCO Industries and TerraCom.
Diversification Opportunities for NACCO Industries and TerraCom
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NACCO and TerraCom is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NACCO Industries and TerraCom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TerraCom Limited 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 TerraCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TerraCom Limited has no effect on the direction of NACCO Industries i.e., NACCO Industries and TerraCom go up and down completely randomly.
Pair Corralation between NACCO Industries and TerraCom
Allowing for the 90-day total investment horizon NACCO Industries is expected to generate 0.23 times more return on investment than TerraCom. However, NACCO Industries is 4.34 times less risky than TerraCom. It trades about -0.01 of its potential returns per unit of risk. TerraCom Limited is currently generating about -0.04 per unit of risk. If you would invest 3,595 in NACCO Industries on November 9, 2024 and sell it today you would lose (445.00) from holding NACCO Industries or give up 12.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 25.09% |
| Values | Daily Returns |
NACCO Industries vs. TerraCom Limited
Performance |
| Timeline |
| NACCO Industries |
| TerraCom Limited |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
NACCO Industries and TerraCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NACCO Industries and TerraCom
The main advantage of trading using opposite NACCO Industries and TerraCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NACCO Industries position performs unexpectedly, TerraCom 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 TerraCom will offset losses from the drop in TerraCom's long position.| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Indo Tambangraya Megah | NACCO Industries vs. Natural Resource Partners |
| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| 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 | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |