Correlation Between NL Industries and Sealed Air
Can any of the company-specific risk be diversified away by investing in both NL Industries and Sealed Air 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 Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Sealed Air, you can compare the effects of market volatilities on NL Industries and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Sealed Air.
Diversification Opportunities for NL Industries and Sealed Air
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NL Industries and Sealed is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of NL Industries i.e., NL Industries and Sealed Air go up and down completely randomly.
Pair Corralation between NL Industries and Sealed Air
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.34 times more return on investment than Sealed Air. However, NL Industries is 1.34 times more volatile than Sealed Air. It trades about 0.04 of its potential returns per unit of risk. Sealed Air is currently generating about -0.03 per unit of risk. If you would invest 593.00 in NL Industries on August 24, 2024 and sell it today you would earn a total of 218.00 from holding NL Industries or generate 36.76% 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. Sealed Air
Performance |
| Timeline |
| NL Industries |
| Sealed Air |
NL Industries and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Sealed Air
The main advantage of trading using opposite NL Industries and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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