Correlation Between NL Industries and Phunware
Can any of the company-specific risk be diversified away by investing in both NL Industries and Phunware 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 Phunware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Phunware, you can compare the effects of market volatilities on NL Industries and Phunware 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 Phunware. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Phunware.
Diversification Opportunities for NL Industries and Phunware
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NL Industries and Phunware is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Phunware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phunware 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 Phunware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phunware has no effect on the direction of NL Industries i.e., NL Industries and Phunware go up and down completely randomly.
Pair Corralation between NL Industries and Phunware
Allowing for the 90-day total investment horizon NL Industries is expected to generate 72.21 times less return on investment than Phunware. But when comparing it to its historical volatility, NL Industries is 7.62 times less risky than Phunware. It trades about 0.06 of its potential returns per unit of risk. Phunware is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Phunware on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Phunware or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 1.14% |
| Values | Daily Returns |
NL Industries vs. Phunware
Performance |
| Timeline |
| NL Industries |
| Phunware |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NL Industries and Phunware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Phunware
The main advantage of trading using opposite NL Industries and Phunware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Phunware 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 Phunware will offset losses from the drop in Phunware's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Phunware vs. Stepan Company | Phunware vs. Griffon | Phunware vs. NL Industries | Phunware vs. Cementos Pacasmayo SAA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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