Correlation Between Helmerich and Nabors Industries

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

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

Diversification Opportunities for Helmerich and Nabors Industries

0.87

Correlation Coefficient

Helmerich  Nabors Industries

Very poor diversification

The 3 months correlation between Helmerich and Nabors is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Helmerich and Payne and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Helmerich 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 Helmerich and Payne 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 Helmerich i.e., Helmerich and Nabors Industries go up and down completely randomly.

Pair Corralation between Helmerich and Nabors Industries

Allowing for the 90-day total investment horizon Helmerich and Payne is expected to generate 0.66 times more return on investment than Nabors Industries. However, Helmerich and Payne is 1.51 times less risky than Nabors Industries. It trades about 0.08 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.03 per unit of risk. If you would invest  3,152  in Helmerich and Payne on August 31, 2024 and sell it today you would earn a total of  334.00  from holding Helmerich and Payne or generate 10.6% return on investment over 90 days.

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

Helmerich and Payne  vs.  Nabors Industries

Helmerich and Payne

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich and Payne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Helmerich may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Nabors Industries

Risk-Adjusted Performance

2 of 100

Very 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 December 2024.

Pair Trading with Helmerich and Nabors Industries

The main advantage of trading using opposite Helmerich and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helmerich 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 Helmerich and Payne 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.