Correlation Between Jacobs Solutions and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions 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 Jacobs Solutions and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Nabors Industries, you can compare the effects of market volatilities on Jacobs Solutions 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 Jacobs Solutions with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Nabors Industries.
Diversification Opportunities for Jacobs Solutions and Nabors Industries
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and Nabors is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions i.e., Jacobs Solutions and Nabors Industries go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Nabors Industries
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.4 times more return on investment than Nabors Industries. However, Jacobs Solutions is 2.52 times less risky than Nabors Industries. It trades about 0.06 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.02 per unit of risk. If you would invest 10,053 in Jacobs Solutions on September 4, 2024 and sell it today you would earn a total of 3,934 from holding Jacobs Solutions or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Nabors Industries
Performance |
| Timeline |
| Jacobs Solutions |
| Nabors Industries |
Jacobs Solutions and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Nabors Industries
The main advantage of trading using opposite Jacobs Solutions and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions 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.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Sable Offshore Corp | Nabors Industries vs. Patterson UTI Energy |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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