Correlation Between Cheniere Energy and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and Nabors Industries 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 Cheniere Energy and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Nabors Industries, you can compare the effects of market volatilities on Cheniere Energy and Nabors Industries 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 Cheniere Energy with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Nabors Industries.
Diversification Opportunities for Cheniere Energy and Nabors Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cheniere and Nabors is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Cheniere 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 Cheniere Energy Partners are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Nabors Industries go up and down completely randomly.
Pair Corralation between Cheniere Energy and Nabors Industries
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.45 times more return on investment than Nabors Industries. However, Cheniere Energy Partners is 2.21 times less risky than Nabors Industries. It trades about 0.52 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.0 per unit of risk. If you would invest 4,973 in Cheniere Energy Partners on September 1, 2024 and sell it today you would earn a total of 869.00 from holding Cheniere Energy Partners or generate 17.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Nabors Industries
Performance |
| Timeline |
| Cheniere Energy Partners |
| Nabors Industries |
Cheniere Energy and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Nabors Industries
The main advantage of trading using opposite Cheniere Energy and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, Nabors Industries 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 Industries will offset losses from the drop in Nabors Industries' long position.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Plains GP Holdings | Cheniere Energy vs. Antero Midstream Partners |
| Nabors Industries vs. Borr Drilling | Nabors Industries vs. Patterson UTI Energy | Nabors Industries vs. Noble plc | Nabors Industries vs. Helmerich and Payne |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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