Correlation Between Nabors Industries and Shoe Carnival

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Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Shoe Carnival, you can compare the effects of market volatilities on Nabors Industries and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Shoe Carnival.

Diversification Opportunities for Nabors Industries and Shoe Carnival

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nabors and Shoe is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Nabors Industries i.e., Nabors Industries and Shoe Carnival go up and down completely randomly.

Pair Corralation between Nabors Industries and Shoe Carnival

Considering the 90-day investment horizon Nabors Industries is expected to generate 1.53 times more return on investment than Shoe Carnival. However, Nabors Industries is 1.53 times more volatile than Shoe Carnival. It trades about 0.03 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.03 per unit of risk. If you would invest  6,910  in Nabors Industries on September 1, 2024 and sell it today you would earn a total of  433.00  from holding Nabors Industries or generate 6.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Nabors Industries  vs.  Shoe Carnival

 Performance 
       Timeline  
Nabors Industries 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Nabors Industries may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Shoe Carnival 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shoe Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Nabors Industries and Shoe Carnival Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nabors Industries and Shoe Carnival

The main advantage of trading using opposite Nabors Industries and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.
The idea behind Nabors Industries and Shoe Carnival pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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