Correlation Between National Beverage and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Nabors Industries, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Nabors Industries.
Diversification Opportunities for National Beverage and Nabors Industries
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Nabors is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Nabors Industries go up and down completely randomly.
Pair Corralation between National Beverage and Nabors Industries
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.53 times more return on investment than Nabors Industries. However, National Beverage Corp is 1.9 times less risky than Nabors Industries. It trades about 0.02 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.01 per unit of risk. If you would invest 4,604 in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of 335.00 from holding National Beverage Corp or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Nabors Industries
Performance |
| Timeline |
| National Beverage Corp |
| Nabors Industries |
National Beverage and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Nabors Industries
The main advantage of trading using opposite National Beverage and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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