Correlation Between NL Industries and SunOpta
Can any of the company-specific risk be diversified away by investing in both NL Industries and SunOpta 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 SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and SunOpta, you can compare the effects of market volatilities on NL Industries and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and SunOpta.
Diversification Opportunities for NL Industries and SunOpta
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NL Industries and SunOpta is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of NL Industries i.e., NL Industries and SunOpta go up and down completely randomly.
Pair Corralation between NL Industries and SunOpta
Allowing for the 90-day total investment horizon NL Industries is expected to generate 0.8 times more return on investment than SunOpta. However, NL Industries is 1.25 times less risky than SunOpta. It trades about 0.06 of its potential returns per unit of risk. SunOpta is currently generating about 0.04 per unit of risk. If you would invest 495.00 in NL Industries on September 12, 2024 and sell it today you would earn a total of 300.00 from holding NL Industries or generate 60.61% 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. SunOpta
Performance |
| Timeline |
| NL Industries |
| SunOpta |
NL Industries and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and SunOpta
The main advantage of trading using opposite NL Industries and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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