Correlation Between NL Industries and CannaGlobal Acquisition

Can any of the company-specific risk be diversified away by investing in both NL Industries and CannaGlobal Acquisition 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 CannaGlobal Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NL Industries and CannaGlobal Acquisition Corp, you can compare the effects of market volatilities on NL Industries and CannaGlobal Acquisition 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 CannaGlobal Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and CannaGlobal Acquisition.

Diversification Opportunities for NL Industries and CannaGlobal Acquisition

-0.56

Correlation Coefficient

NL Industries  CannaGlobal Acquisition

Excellent diversification

The 3 months correlation between NL Industries and CannaGlobal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and CannaGlobal Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannaGlobal Acquisition 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 CannaGlobal Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannaGlobal Acquisition has no effect on the direction of NL Industries i.e., NL Industries and CannaGlobal Acquisition go up and down completely randomly.

Pair Corralation between NL Industries and CannaGlobal Acquisition

If you would invest  628.00  in NL Industries on September 5, 2024 and sell it today you would earn a total of  193.00  from holding NL Industries or generate 30.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

NL Industries  vs.  CannaGlobal Acquisition Corp

NL Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, NL Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

CannaGlobal Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CannaGlobal Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, CannaGlobal Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NL Industries and CannaGlobal Acquisition

The main advantage of trading using opposite NL Industries and CannaGlobal Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, CannaGlobal Acquisition 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 CannaGlobal Acquisition will offset losses from the drop in CannaGlobal Acquisition's long position.

The idea behind NL Industries and CannaGlobal Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.