Correlation Between European Wax and NL Industries
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and NL Industries, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and NL Industries.
Diversification Opportunities for European Wax and NL Industries
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and NL Industries is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and NL Industries go up and down completely randomly.
Pair Corralation between European Wax and NL Industries
Given the investment horizon of 90 days European Wax Center is expected to under-perform the NL Industries. In addition to that, European Wax is 1.25 times more volatile than NL Industries. It trades about -0.07 of its total potential returns per unit of risk. NL Industries is currently generating about 0.07 per unit of volatility. If you would invest 502.00 in NL Industries on September 24, 2024 and sell it today you would earn a total of 294.00 from holding NL Industries or generate 58.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
European Wax Center vs. NL Industries
Performance |
Timeline |
European Wax Center |
NL Industries |
European Wax and NL Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with European Wax and NL Industries
The main advantage of trading using opposite European Wax and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.European Wax vs. Edgewell Personal Care | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated | European Wax vs. Spectrum Brands Holdings |
NL Industries vs. International Consolidated Companies | NL Industries vs. Frontera Group | NL Industries vs. All American Pet | NL Industries vs. XCPCNL Business Services |
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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