Correlation Between Nabors Industries and LifePoint

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

By analyzing existing cross correlation between Nabors Industries and LifePoint Health 4375, you can compare the effects of market volatilities on Nabors Industries and LifePoint 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 LifePoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and LifePoint.

Diversification Opportunities for Nabors Industries and LifePoint

0.16

Correlation Coefficient

Nabors Industries  LifePoint

Average diversification

The 3 months correlation between Nabors and LifePoint is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and LifePoint Health 4375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifePoint Health 4375 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 LifePoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifePoint Health 4375 has no effect on the direction of Nabors Industries i.e., Nabors Industries and LifePoint go up and down completely randomly.

Pair Corralation between Nabors Industries and LifePoint

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the LifePoint. In addition to that, Nabors Industries is 1.52 times more volatile than LifePoint Health 4375. It trades about -0.13 of its total potential returns per unit of risk. LifePoint Health 4375 is currently generating about -0.18 per unit of volatility. If you would invest  9,720  in LifePoint Health 4375 on September 17, 2024 and sell it today you would lose (1,205) from holding LifePoint Health 4375 or give up 12.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.05%
Values	Daily Returns

Nabors Industries  vs.  LifePoint Health 4375

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 relatively invariable fundamental drivers, Nabors Industries is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LifePoint Health 4375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LifePoint Health 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LifePoint Health 4375 investors.

Pair Trading with Nabors Industries and LifePoint

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

The idea behind Nabors Industries and LifePoint Health 4375 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..