Correlation Between Nabors Industries and Bank of America
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Bank of America, you can compare the effects of market volatilities on Nabors Industries and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Bank of America.
Diversification Opportunities for Nabors Industries and Bank of America
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nabors and Bank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Nabors Industries i.e., Nabors Industries and Bank of America go up and down completely randomly.
Pair Corralation between Nabors Industries and Bank of America
Considering the 90-day investment horizon Nabors Industries is expected to generate 7.46 times more return on investment than Bank of America. However, Nabors Industries is 7.46 times more volatile than Bank of America. It trades about 0.03 of its potential returns per unit of risk. Bank of America is currently generating about 0.06 per unit of risk. If you would invest 7,189 in Nabors Industries on August 28, 2024 and sell it today you would earn a total of 320.00 from holding Nabors Industries or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. Bank of America
Performance |
| Timeline |
| Nabors Industries |
| Bank of America |
Nabors Industries and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Bank of America
The main advantage of trading using opposite Nabors Industries and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Patterson UTI Energy | Nabors Industries vs. Borr Drilling |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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