Correlation Between Associated Capital and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Nabors Energy 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 Associated Capital and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Nabors Energy Transition, you can compare the effects of market volatilities on Associated Capital and Nabors Energy 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 Associated Capital with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Nabors Energy.
Diversification Opportunities for Associated Capital and Nabors Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Nabors is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition and Associated Capital 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 Associated Capital Group are associated (or correlated) with Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Associated Capital i.e., Associated Capital and Nabors Energy go up and down completely randomly.
Pair Corralation between Associated Capital and Nabors Energy
Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Nabors Energy. But the stock apears to be less risky and, when comparing its historical volatility, Associated Capital Group is 8.88 times less risky than Nabors Energy. The stock trades about -0.02 of its potential returns per unit of risk. The Nabors Energy Transition is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Nabors Energy Transition on September 12, 2024 and sell it today you would earn a total of 6.50 from holding Nabors Energy Transition or generate 65.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Associated Capital Group vs. Nabors Energy Transition
Performance |
| Timeline |
| Associated Capital |
| Nabors Energy Transition |
Associated Capital and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Nabors Energy
The main advantage of trading using opposite Associated Capital and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Nabors Energy 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 Nabors Energy will offset losses from the drop in Nabors Energy's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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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.
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