Correlation Between National Presto and NL Industries
Can any of the company-specific risk be diversified away by investing in both National Presto and NL Industries 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 National Presto and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Presto Industries and NL Industries, you can compare the effects of market volatilities on National Presto and NL Industries 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 National Presto with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Presto and NL Industries.
Diversification Opportunities for National Presto and NL Industries
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and NL Industries is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and National Presto 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 National Presto Industries are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of National Presto i.e., National Presto and NL Industries go up and down completely randomly.
Pair Corralation between National Presto and NL Industries
Considering the 90-day investment horizon National Presto is expected to generate 10.23 times less return on investment than NL Industries. But when comparing it to its historical volatility, National Presto Industries is 2.3 times less risky than NL Industries. It trades about 0.02 of its potential returns per unit of risk. NL Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 469.00 in NL Industries on August 27, 2024 and sell it today you would earn a total of 342.00 from holding NL Industries or generate 72.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Presto Industries vs. NL Industries
Performance |
| Timeline |
| National Presto Indu |
| NL Industries |
National Presto and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Presto and NL Industries
The main advantage of trading using opposite National Presto and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Presto position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
| NL Industries vs. Park Electrochemical | NL Industries vs. Innovative Solutions and | NL Industries vs. Curtiss Wright | NL Industries vs. National Presto Industries |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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