Correlation Between Citizens and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Nabors Energy Transition, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Nabors Energy.
Diversification Opportunities for Citizens and Nabors Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citizens and Nabors is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citizens 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 Citizens 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 Citizens 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 Citizens i.e., Citizens and Nabors Energy go up and down completely randomly.
Pair Corralation between Citizens and Nabors Energy
Considering the 90-day investment horizon Citizens is expected to generate 5.4 times less return on investment than Nabors Energy. But when comparing it to its historical volatility, Citizens is 3.03 times less risky than Nabors Energy. It trades about 0.05 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.09 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 | Very Weak |
| Accuracy | 64.52% |
| Values | Daily Returns |
Citizens vs. Nabors Energy Transition
Performance |
| Timeline |
| Citizens |
| Nabors Energy Transition |
Citizens and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Nabors Energy
The main advantage of trading using opposite Citizens and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.| Citizens vs. Lincoln National | Citizens vs. Aflac Incorporated | Citizens vs. Unum Group | Citizens vs. Manulife Financial Corp |
| Nabors Energy vs. Citizens | Nabors Energy vs. Trupanion | Nabors Energy vs. QBE Insurance Group | Nabors Energy vs. Relx PLC ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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