Correlation Between Nabors Energy and Citizens Bancshares

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

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

Diversification Opportunities for Nabors Energy and Citizens Bancshares

-0.43

Correlation Coefficient

Nabors Energy  Citizens Bancshares

Very good diversification

The 3 months correlation between Nabors and Citizens is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Citizens Bancshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancshares Corp and Nabors Energy 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 Energy Transition are associated (or correlated) with Citizens Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancshares Corp has no effect on the direction of Nabors Energy i.e., Nabors Energy and Citizens Bancshares go up and down completely randomly.

Pair Corralation between Nabors Energy and Citizens Bancshares

Assuming the 90 days horizon Nabors Energy is expected to generate 6.13 times less return on investment than Citizens Bancshares. But when comparing it to its historical volatility, Nabors Energy Transition is 8.67 times less risky than Citizens Bancshares. It trades about 0.1 of its potential returns per unit of risk. Citizens Bancshares Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,654  in Citizens Bancshares Corp on September 28, 2024 and sell it today you would earn a total of  2,413  from holding Citizens Bancshares Corp or generate 90.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Nabors Energy Transition  vs.  Citizens Bancshares Corp

Nabors Energy Transition

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nabors Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Citizens Bancshares Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabors Energy and Citizens Bancshares

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

The idea behind Nabors Energy Transition and Citizens Bancshares 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.