Correlation Between Dynagas LNG and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG 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 Dynagas LNG and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and Nabors Industries, you can compare the effects of market volatilities on Dynagas LNG 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 Dynagas LNG with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Nabors Industries.
Diversification Opportunities for Dynagas LNG and Nabors Industries
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dynagas and Nabors is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Dynagas LNG 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 Dynagas LNG 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 Dynagas LNG i.e., Dynagas LNG and Nabors Industries go up and down completely randomly.
Pair Corralation between Dynagas LNG and Nabors Industries
Given the investment horizon of 90 days Dynagas LNG Partners is expected to generate 0.67 times more return on investment than Nabors Industries. However, Dynagas LNG Partners is 1.49 times less risky than Nabors Industries. It trades about 0.1 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.05 per unit of risk. If you would invest 377.00 in Dynagas LNG Partners on November 4, 2024 and sell it today you would earn a total of 110.00 from holding Dynagas LNG Partners or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynagas LNG Partners vs. Nabors Industries
Performance |
| Timeline |
| Dynagas LNG Partners |
| Nabors Industries |
Dynagas LNG and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Nabors Industries
The main advantage of trading using opposite Dynagas LNG and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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.| Dynagas LNG vs. Tidewater Midstream and | Dynagas LNG vs. Martin Midstream Partners | Dynagas LNG vs. Kinetik Holdings | Dynagas LNG vs. Dynagas LNG Partners |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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