Correlation Between NL Industries and Willdan
Can any of the company-specific risk be diversified away by investing in both NL Industries and Willdan 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 Willdan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Willdan Group, you can compare the effects of market volatilities on NL Industries and Willdan 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 Willdan. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Willdan.
Diversification Opportunities for NL Industries and Willdan
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NL Industries and Willdan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of NL Industries i.e., NL Industries and Willdan go up and down completely randomly.
Pair Corralation between NL Industries and Willdan
Allowing for the 90-day total investment horizon NL Industries is expected to generate 2.52 times less return on investment than Willdan. But when comparing it to its historical volatility, NL Industries is 1.18 times less risky than Willdan. It trades about 0.04 of its potential returns per unit of risk. Willdan Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,510 in Willdan Group on August 28, 2024 and sell it today you would earn a total of 2,791 from holding Willdan Group or generate 184.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Willdan Group
Performance |
| Timeline |
| NL Industries |
| Willdan Group |
NL Industries and Willdan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Willdan
The main advantage of trading using opposite NL Industries and Willdan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Willdan 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 Willdan will offset losses from the drop in Willdan's long position.| NL Industries vs. Park Electrochemical | NL Industries vs. Innovative Solutions and | NL Industries vs. Curtiss Wright | NL Industries vs. National Presto Industries |
| Willdan vs. Franklin Covey | Willdan vs. TransUnion | Willdan vs. ICF International | Willdan vs. Huron Consulting Group |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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