Correlation Between Nabors Industries and Seadrill
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Seadrill 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 Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Seadrill Limited, you can compare the effects of market volatilities on Nabors Industries and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Seadrill.
Diversification Opportunities for Nabors Industries and Seadrill
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nabors and Seadrill is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Nabors Industries i.e., Nabors Industries and Seadrill go up and down completely randomly.
Pair Corralation between Nabors Industries and Seadrill
Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Seadrill. In addition to that, Nabors Industries is 1.45 times more volatile than Seadrill Limited. It trades about -0.02 of its total potential returns per unit of risk. Seadrill Limited is currently generating about 0.03 per unit of volatility. If you would invest 3,160 in Seadrill Limited on August 23, 2024 and sell it today you would earn a total of 871.00 from holding Seadrill Limited or generate 27.56% 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. Seadrill Limited
Performance |
| Timeline |
| Nabors Industries |
| Seadrill Limited |
Nabors Industries and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Seadrill
The main advantage of trading using opposite Nabors Industries and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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