Correlation Between Nabors Industries and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Jacobs Solutions 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 Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Jacobs Solutions, you can compare the effects of market volatilities on Nabors Industries and Jacobs Solutions 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 Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Jacobs Solutions.
Diversification Opportunities for Nabors Industries and Jacobs Solutions
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nabors and Jacobs is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Nabors Industries i.e., Nabors Industries and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Nabors Industries and Jacobs Solutions
Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Jacobs Solutions. In addition to that, Nabors Industries is 2.52 times more volatile than Jacobs Solutions. It trades about -0.02 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about 0.06 per unit of volatility. If you would invest 10,068 in Jacobs Solutions on September 3, 2024 and sell it today you would earn a total of 4,055 from holding Jacobs Solutions or generate 40.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. Jacobs Solutions
Performance |
| Timeline |
| Nabors Industries |
| Jacobs Solutions |
Nabors Industries and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Jacobs Solutions
The main advantage of trading using opposite Nabors Industries and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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