Correlation Between Nabors Industries and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Ambev SA 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 Nabors Industries and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Ambev SA ADR, you can compare the effects of market volatilities on Nabors Industries and Ambev SA 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 Nabors Industries with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Ambev SA.
Diversification Opportunities for Nabors Industries and Ambev SA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nabors and Ambev is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Nabors Industries 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 Nabors Industries are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Nabors Industries i.e., Nabors Industries and Ambev SA go up and down completely randomly.
Pair Corralation between Nabors Industries and Ambev SA
Considering the 90-day investment horizon Nabors Industries is expected to generate 2.36 times more return on investment than Ambev SA. However, Nabors Industries is 2.36 times more volatile than Ambev SA ADR. It trades about 0.01 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.06 per unit of risk. If you would invest 7,986 in Nabors Industries on September 2, 2024 and sell it today you would lose (643.00) from holding Nabors Industries or give up 8.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. Ambev SA ADR
Performance |
| Timeline |
| Nabors Industries |
| Ambev SA ADR |
Nabors Industries and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Ambev SA
The main advantage of trading using opposite Nabors Industries and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
| Ambev SA vs. Compania Cervecerias Unidas | Ambev SA vs. Molson Coors Brewing | Ambev SA vs. Suntory Beverage Food | Ambev SA vs. Carlsberg AS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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