Correlation Between Nabors Industries and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and RBC Bearings Incorporated, you can compare the effects of market volatilities on Nabors Industries and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and RBC Bearings.
Diversification Opportunities for Nabors Industries and RBC Bearings
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nabors and RBC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Nabors Industries i.e., Nabors Industries and RBC Bearings go up and down completely randomly.
Pair Corralation between Nabors Industries and RBC Bearings
Considering the 90-day investment horizon Nabors Industries is expected to under-perform the RBC Bearings. In addition to that, Nabors Industries is 1.39 times more volatile than RBC Bearings Incorporated. It trades about 0.0 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.37 per unit of volatility. If you would invest 28,035 in RBC Bearings Incorporated on September 1, 2024 and sell it today you would earn a total of 5,476 from holding RBC Bearings Incorporated or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Nabors Industries |
| RBC Bearings |
Nabors Industries and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and RBC Bearings
The main advantage of trading using opposite Nabors Industries and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| Nabors Industries vs. Borr Drilling | Nabors Industries vs. Patterson UTI Energy | Nabors Industries vs. Noble plc | Nabors Industries vs. Helmerich and Payne |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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