Correlation Between NL Industries and Loomis AB
Can any of the company-specific risk be diversified away by investing in both NL Industries and Loomis AB 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 Loomis AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Loomis AB, you can compare the effects of market volatilities on NL Industries and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Loomis AB.
Diversification Opportunities for NL Industries and Loomis AB
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NL Industries and Loomis is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis AB 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of NL Industries i.e., NL Industries and Loomis AB go up and down completely randomly.
Pair Corralation between NL Industries and Loomis AB
Allowing for the 90-day total investment horizon NL Industries is expected to generate 0.83 times more return on investment than Loomis AB. However, NL Industries is 1.2 times less risky than Loomis AB. It trades about -0.19 of its potential returns per unit of risk. Loomis AB is currently generating about -0.22 per unit of risk. If you would invest 790.00 in NL Industries on October 20, 2024 and sell it today you would lose (51.00) from holding NL Industries or give up 6.46% 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. Loomis AB
Performance |
| Timeline |
| NL Industries |
| Loomis AB |
NL Industries and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Loomis AB
The main advantage of trading using opposite NL Industries and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |