Correlation Between Nabors Industries and CDW Corp

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

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

Diversification Opportunities for Nabors Industries and CDW Corp

-0.04

Correlation Coefficient

Nabors Industries  CDW Corp

Good diversification

The 3 months correlation between Nabors and CDW is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Nabors 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 Nabors Industries are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Nabors Industries i.e., Nabors Industries and CDW Corp go up and down completely randomly.

Pair Corralation between Nabors Industries and CDW Corp

Considering the 90-day investment horizon Nabors Industries is expected to generate 1.71 times more return on investment than CDW Corp. However, Nabors Industries is 1.71 times more volatile than CDW Corp. It trades about -0.03 of its potential returns per unit of risk. CDW Corp is currently generating about -0.17 per unit of risk. If you would invest  6,858  in Nabors Industries on September 19, 2024 and sell it today you would lose (686.00) from holding Nabors Industries or give up 10.0% of portfolio value over 90 days.

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

Nabors Industries  vs.  CDW Corp

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CDW Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nabors Industries and CDW Corp

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

The idea behind Nabors Industries and CDW Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.