Correlation Between NL Industries and Assurant
Can any of the company-specific risk be diversified away by investing in both NL Industries and Assurant 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 NL Industries and Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Assurant, you can compare the effects of market volatilities on NL Industries and Assurant 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 NL Industries with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Assurant.
Diversification Opportunities for NL Industries and Assurant
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NL Industries and Assurant is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and NL 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 NL Industries are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of NL Industries i.e., NL Industries and Assurant go up and down completely randomly.
Pair Corralation between NL Industries and Assurant
Allowing for the 90-day total investment horizon NL Industries is expected to generate 8.01 times less return on investment than Assurant. In addition to that, NL Industries is 2.24 times more volatile than Assurant. It trades about 0.02 of its total potential returns per unit of risk. Assurant is currently generating about 0.4 per unit of volatility. If you would invest 19,371 in Assurant on August 24, 2024 and sell it today you would earn a total of 3,156 from holding Assurant or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Assurant
Performance |
| Timeline |
| NL Industries |
| Assurant |
NL Industries and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Assurant
The main advantage of trading using opposite NL Industries and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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