Correlation Between Nabors Industries and American Eagle
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and American Eagle Outfitters, you can compare the effects of market volatilities on Nabors Industries and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and American Eagle.
Diversification Opportunities for Nabors Industries and American Eagle
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nabors and American is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Nabors Industries i.e., Nabors Industries and American Eagle go up and down completely randomly.
Pair Corralation between Nabors Industries and American Eagle
Considering the 90-day investment horizon Nabors Industries is expected to under-perform the American Eagle. In addition to that, Nabors Industries is 1.37 times more volatile than American Eagle Outfitters. It trades about -0.02 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.04 per unit of volatility. If you would invest 1,479 in American Eagle Outfitters on September 3, 2024 and sell it today you would earn a total of 514.00 from holding American Eagle Outfitters or generate 34.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. American Eagle Outfitters
Performance |
| Timeline |
| Nabors Industries |
| American Eagle Outfitters |
Nabors Industries and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and American Eagle
The main advantage of trading using opposite Nabors Industries and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess Inc |
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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