Correlation Between NL Industries and Kforce

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

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

Diversification Opportunities for NL Industries and Kforce

-0.32

Correlation Coefficient

NL Industries  Kforce

Very good diversification

The 3 months correlation between NL Industries and Kforce is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce 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 Kforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kforce Inc has no effect on the direction of NL Industries i.e., NL Industries and Kforce go up and down completely randomly.

Pair Corralation between NL Industries and Kforce

Allowing for the 90-day total investment horizon NL Industries is expected to under-perform the Kforce. But the stock apears to be less risky and, when comparing its historical volatility, NL Industries is 1.04 times less risky than Kforce. The stock trades about -0.21 of its potential returns per unit of risk. The Kforce Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,730  in Kforce Inc on May 7, 2025 and sell it today you would lose (293.00) from holding Kforce Inc or give up 7.86% 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.  Kforce Inc

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.

Kforce Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kforce is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NL Industries and Kforce

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

The idea behind NL Industries and Kforce 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .