Correlation Between NL Industries and Hawkins
Can any of the company-specific risk be diversified away by investing in both NL Industries and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Hawkins, you can compare the effects of market volatilities on NL Industries and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Hawkins.
Diversification Opportunities for NL Industries and Hawkins
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NL Industries and Hawkins is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of NL Industries i.e., NL Industries and Hawkins go up and down completely randomly.
Pair Corralation between NL Industries and Hawkins
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.12 times more return on investment than Hawkins. However, NL Industries is 1.12 times more volatile than Hawkins. It trades about 0.11 of its potential returns per unit of risk. Hawkins is currently generating about 0.07 per unit of risk. If you would invest 674.00 in NL Industries on August 28, 2024 and sell it today you would earn a total of 134.00 from holding NL Industries or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Hawkins
Performance |
| Timeline |
| NL Industries |
| Hawkins |
NL Industries and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Hawkins
The main advantage of trading using opposite NL Industries and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| NL Industries vs. Park Electrochemical | NL Industries vs. Innovative Solutions and | NL Industries vs. Curtiss Wright | NL Industries vs. National Presto Industries |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Positions Ratings module to 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.
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