Correlation Between NL Industries and Boston Beer
Can any of the company-specific risk be diversified away by investing in both NL Industries and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Boston Beer, you can compare the effects of market volatilities on NL Industries and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Boston Beer.
Diversification Opportunities for NL Industries and Boston Beer
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NL Industries and Boston is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of NL Industries i.e., NL Industries and Boston Beer go up and down completely randomly.
Pair Corralation between NL Industries and Boston Beer
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.97 times more return on investment than Boston Beer. However, NL Industries is 1.97 times more volatile than Boston Beer. It trades about 0.06 of its potential returns per unit of risk. Boston Beer is currently generating about 0.03 per unit of risk. If you would invest 677.00 in NL Industries on September 1, 2024 and sell it today you would earn a total of 118.00 from holding NL Industries or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Boston Beer
Performance |
| Timeline |
| NL Industries |
| Boston Beer |
NL Industries and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Boston Beer
The main advantage of trading using opposite NL Industries and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |