Correlation Between Leonardo Spa and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Leonardo Spa 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 Leonardo Spa and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leonardo Spa and Nabors Industries, you can compare the effects of market volatilities on Leonardo Spa 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 Leonardo Spa with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leonardo Spa and Nabors Industries.
Diversification Opportunities for Leonardo Spa and Nabors Industries
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Leonardo and Nabors is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Leonardo Spa and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Leonardo Spa 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 Leonardo Spa 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 Leonardo Spa i.e., Leonardo Spa and Nabors Industries go up and down completely randomly.
Pair Corralation between Leonardo Spa and Nabors Industries
Assuming the 90 days horizon Leonardo Spa is expected to generate 1.24 times more return on investment than Nabors Industries. However, Leonardo Spa is 1.24 times more volatile than Nabors Industries. It trades about 0.17 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.03 per unit of risk. If you would invest 2,395 in Leonardo Spa on September 4, 2024 and sell it today you would earn a total of 306.00 from holding Leonardo Spa or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leonardo Spa vs. Nabors Industries
Performance |
| Timeline |
| Leonardo Spa |
| Nabors Industries |
Leonardo Spa and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leonardo Spa and Nabors Industries
The main advantage of trading using opposite Leonardo Spa and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leonardo Spa 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.| Leonardo Spa vs. AKITA Drilling | Leonardo Spa vs. Artisan Partners Asset | Leonardo Spa vs. Uranium Energy Corp | Leonardo Spa vs. Transocean |
| Nabors Industries vs. Precision Drilling | Nabors Industries vs. Sable Offshore Corp | Nabors Industries vs. Patterson UTI Energy | Nabors Industries vs. Seadrill Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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