Correlation Between NL Industries and Enersys
Can any of the company-specific risk be diversified away by investing in both NL Industries and Enersys 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 Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Enersys, you can compare the effects of market volatilities on NL Industries and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Enersys.
Diversification Opportunities for NL Industries and Enersys
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between NL Industries and Enersys is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of NL Industries i.e., NL Industries and Enersys go up and down completely randomly.
Pair Corralation between NL Industries and Enersys
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.76 times more return on investment than Enersys. However, NL Industries is 1.76 times more volatile than Enersys. It trades about 0.11 of its potential returns per unit of risk. Enersys is currently generating about 0.01 per unit of risk. If you would invest 741.00 in NL Industries on September 1, 2024 and sell it today you would earn a total of 54.00 from holding NL Industries or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Enersys
Performance |
| Timeline |
| NL Industries |
| Enersys |
NL Industries and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Enersys
The main advantage of trading using opposite NL Industries and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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