Correlation Between Avient Corp and Nabors Industries

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

By analyzing existing cross correlation between Avient Corp and Nabors Industries, you can compare the effects of market volatilities on Avient Corp and Nabors 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 Avient Corp with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Nabors Industries.

Diversification Opportunities for Avient Corp and Nabors Industries

0.43

Correlation Coefficient

Avient Corp  Nabors Industries

Very weak diversification

The 3 months correlation between Avient and Nabors is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Avient Corp 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 Avient Corp are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Avient Corp i.e., Avient Corp and Nabors Industries go up and down completely randomly.

Pair Corralation between Avient Corp and Nabors Industries

Given the investment horizon of 90 days Avient Corp is expected to generate 0.46 times more return on investment than Nabors Industries. However, Avient Corp is 2.16 times less risky than Nabors Industries. It trades about 0.09 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.03 per unit of risk. If you would invest  4,705  in Avient Corp on September 3, 2024 and sell it today you would earn a total of  420.00  from holding Avient Corp or generate 8.93% return on investment over 90 days.

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

Avient Corp  vs.  Nabors Industries

Avient Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nabors Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Nabors Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avient Corp and Nabors Industries

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

The idea behind Avient Corp and Nabors Industries 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.