Correlation Between NL Industries and Corpay

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

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

Diversification Opportunities for NL Industries and Corpay

0.58

Correlation Coefficient

NL Industries  Corpay

Very weak diversification

The 3 months correlation between NL Industries and Corpay is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay Inc 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 Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of NL Industries i.e., NL Industries and Corpay go up and down completely randomly.

Pair Corralation between NL Industries and Corpay

Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.64 times less return on investment than Corpay. In addition to that, NL Industries is 1.66 times more volatile than Corpay Inc. It trades about 0.03 of its total potential returns per unit of risk. Corpay Inc is currently generating about 0.08 per unit of volatility. If you would invest  19,470  in Corpay Inc on October 4, 2024 and sell it today you would earn a total of  14,421  from holding Corpay Inc or generate 74.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NL Industries  vs.  Corpay Inc

NL Industries

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, NL Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Corpay Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Corpay is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NL Industries and Corpay

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

The idea behind NL Industries and Corpay Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.