Correlation Between NL Industries and Cass Information

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

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

Diversification Opportunities for NL Industries and Cass Information

-0.19

Correlation Coefficient

NL Industries  Cass Information

Good diversification

The 3 months correlation between NL Industries and Cass is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of NL Industries i.e., NL Industries and Cass Information go up and down completely randomly.

Pair Corralation between NL Industries and Cass Information

Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.93 times more return on investment than Cass Information. However, NL Industries is 1.93 times more volatile than Cass Information Systems. It trades about -0.1 of its potential returns per unit of risk. Cass Information Systems is currently generating about -0.27 per unit of risk. If you would invest  646.00  in NL Industries on May 7, 2025 and sell it today you would lose (50.00) from holding NL Industries or give up 7.74% of portfolio value over 90 days.

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

NL Industries  vs.  Cass Information Systems

NL Industries

Risk-Adjusted Performance

Weakest

Over the last 90 days NL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cass Information Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cass Information 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 Cass Information

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

The idea behind NL Industries and Cass Information Systems 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.