Correlation Between Diamond Offshore and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Diamond Offshore 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 Diamond Offshore and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Offshore Drilling and Nabors Industries, you can compare the effects of market volatilities on Diamond Offshore 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 Diamond Offshore with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Offshore and Nabors Industries.
Diversification Opportunities for Diamond Offshore and Nabors Industries
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Nabors is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Offshore Drilling and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Diamond Offshore 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 Diamond Offshore Drilling 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 Diamond Offshore i.e., Diamond Offshore and Nabors Industries go up and down completely randomly.
Pair Corralation between Diamond Offshore and Nabors Industries
Allowing for the 90-day total investment horizon Diamond Offshore Drilling is expected to under-perform the Nabors Industries. In addition to that, Diamond Offshore is 1.6 times more volatile than Nabors Industries. It trades about -0.02 of its total potential returns per unit of risk. Nabors Industries is currently generating about -0.02 per unit of volatility. If you would invest 14,308 in Nabors Industries on August 27, 2024 and sell it today you would lose (6,578) from holding Nabors Industries or give up 45.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.51% |
| Values | Daily Returns |
Diamond Offshore Drilling vs. Nabors Industries
Performance |
| Timeline |
| Diamond Offshore Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nabors Industries |
Diamond Offshore and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Offshore and Nabors Industries
The main advantage of trading using opposite Diamond Offshore and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Offshore 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.| Diamond Offshore vs. Seadrill Limited | Diamond Offshore vs. Nabors Industries | Diamond Offshore vs. Borr Drilling | Diamond Offshore vs. Patterson UTI Energy |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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