Correlation Between Nabors Industries and 06050WGU3

Can any of the company-specific risk be diversified away by investing in both Nabors Industries and 06050WGU3 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 06050WGU3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nabors Industries and US06050WGU36, you can compare the effects of market volatilities on Nabors Industries and 06050WGU3 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 06050WGU3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and 06050WGU3.

Diversification Opportunities for Nabors Industries and 06050WGU3

0.28

Correlation Coefficient

Nabors Industries  06050WGU3

Modest diversification

The 3 months correlation between Nabors and 06050WGU3 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and US06050WGU36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US06050WGU36 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 06050WGU3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US06050WGU36 has no effect on the direction of Nabors Industries i.e., Nabors Industries and 06050WGU3 go up and down completely randomly.

Pair Corralation between Nabors Industries and 06050WGU3

Considering the 90-day investment horizon Nabors Industries is expected to generate 1.26 times more return on investment than 06050WGU3. However, Nabors Industries is 1.26 times more volatile than US06050WGU36. It trades about 0.05 of its potential returns per unit of risk. US06050WGU36 is currently generating about -0.03 per unit of risk. If you would invest  6,413  in Nabors Industries on September 14, 2024 and sell it today you would earn a total of  450.00  from holding Nabors Industries or generate 7.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	36.51%
Values	Daily Returns

Nabors Industries  vs.  US06050WGU36

Nabors Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Industries are ranked lower than 3 (%) 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.

US06050WGU36

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US06050WGU36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 06050WGU3 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nabors Industries and 06050WGU3

The main advantage of trading using opposite Nabors Industries and 06050WGU3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, 06050WGU3 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 06050WGU3 will offset losses from the drop in 06050WGU3's long position.

The idea behind Nabors Industries and US06050WGU36 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.