Correlation Between Nabors Industries and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Japan Tobacco 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 Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Japan Tobacco ADR, you can compare the effects of market volatilities on Nabors Industries and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Japan Tobacco.
Diversification Opportunities for Nabors Industries and Japan Tobacco
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nabors and Japan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Japan Tobacco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco ADR has no effect on the direction of Nabors Industries i.e., Nabors Industries and Japan Tobacco go up and down completely randomly.
Pair Corralation between Nabors Industries and Japan Tobacco
Considering the 90-day investment horizon Nabors Industries is expected to generate 2.81 times more return on investment than Japan Tobacco. However, Nabors Industries is 2.81 times more volatile than Japan Tobacco ADR. It trades about 0.06 of its potential returns per unit of risk. Japan Tobacco ADR is currently generating about 0.07 per unit of risk. If you would invest 7,287 in Nabors Industries on August 28, 2024 and sell it today you would earn a total of 222.00 from holding Nabors Industries or generate 3.05% 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. Japan Tobacco ADR
Performance |
| Timeline |
| Nabors Industries |
| Japan Tobacco ADR |
Nabors Industries and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Japan Tobacco
The main advantage of trading using opposite Nabors Industries and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco's long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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