Correlation Between Ford and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Nabors Energy Transition, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Nabors Energy.
Diversification Opportunities for Ford and Nabors Energy
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Nabors is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Nabors Energy go up and down completely randomly.
Pair Corralation between Ford and Nabors Energy
Taking into account the 90-day investment horizon Ford is expected to generate 10.29 times less return on investment than Nabors Energy. In addition to that, Ford is 9.18 times more volatile than Nabors Energy Transition. It trades about 0.0 of its total potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.09 per unit of volatility. If you would invest 1,000.00 in Nabors Energy Transition on October 13, 2024 and sell it today you would earn a total of 84.00 from holding Nabors Energy Transition or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.21% |
| Values | Daily Returns |
Ford Motor vs. Nabors Energy Transition
Performance |
| Timeline |
| Ford Motor |
| Nabors Energy Transition |
Ford and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Nabors Energy
The main advantage of trading using opposite Ford and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Nabors Energy Transition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nabors Energy vs. Arq Inc | Nabors Energy vs. FactSet Research Systems | Nabors Energy vs. Weibo Corp | Nabors Energy vs. Definitive Healthcare Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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