Correlation Between NL Industries and Bt Brands
Can any of the company-specific risk be diversified away by investing in both NL Industries and Bt Brands 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 Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Bt Brands, you can compare the effects of market volatilities on NL Industries and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Bt Brands.
Diversification Opportunities for NL Industries and Bt Brands
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NL Industries and BTBD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of NL Industries i.e., NL Industries and Bt Brands go up and down completely randomly.
Pair Corralation between NL Industries and Bt Brands
Allowing for the 90-day total investment horizon NL Industries is expected to generate 0.59 times more return on investment than Bt Brands. However, NL Industries is 1.7 times less risky than Bt Brands. It trades about 0.01 of its potential returns per unit of risk. Bt Brands is currently generating about -0.08 per unit of risk. If you would invest 786.00 in NL Industries on January 18, 2025 and sell it today you would lose (14.00) from holding NL Industries or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Bt Brands
Performance |
| Timeline |
| NL Industries |
| Bt Brands |
NL Industries and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Bt Brands
The main advantage of trading using opposite NL Industries and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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