Correlation Between Nabors Industries and Pinterest

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

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

Diversification Opportunities for Nabors Industries and Pinterest

0.26

Correlation Coefficient

Nabors Industries  Pinterest

Modest diversification

The 3 months correlation between Nabors and Pinterest is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Nabors Industries i.e., Nabors Industries and Pinterest go up and down completely randomly.

Pair Corralation between Nabors Industries and Pinterest

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Pinterest. In addition to that, Nabors Industries is 1.39 times more volatile than Pinterest. It trades about -0.03 of its total potential returns per unit of risk. Pinterest is currently generating about 0.01 per unit of volatility. If you would invest  3,052  in Pinterest on September 19, 2024 and sell it today you would lose (22.00) from holding Pinterest or give up 0.72% of portfolio value over 90 days.

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

Nabors Industries  vs.  Pinterest

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.

Pinterest

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nabors Industries and Pinterest

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

The idea behind Nabors Industries and Pinterest 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.