Correlation Between Nabors Energy and Eltek
Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Eltek 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 Energy and Eltek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Energy Transition and Eltek, you can compare the effects of market volatilities on Nabors Energy and Eltek 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 Energy with a short position of Eltek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Eltek.
Diversification Opportunities for Nabors Energy and Eltek
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nabors and Eltek is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Nabors Energy 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 Energy Transition are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of Nabors Energy i.e., Nabors Energy and Eltek go up and down completely randomly.
Pair Corralation between Nabors Energy and Eltek
Given the investment horizon of 90 days Nabors Energy is expected to generate 1.9 times less return on investment than Eltek. But when comparing it to its historical volatility, Nabors Energy Transition is 43.04 times less risky than Eltek. It trades about 0.43 of its potential returns per unit of risk. Eltek is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Eltek on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Eltek or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Energy Transition vs. Eltek
Performance |
| Timeline |
| Nabors Energy Transition |
| Eltek |
Nabors Energy and Eltek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Energy and Eltek
The main advantage of trading using opposite Nabors Energy and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Energy position performs unexpectedly, Eltek 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 Eltek will offset losses from the drop in Eltek's long position.| Nabors Energy vs. Warner Music Group | Nabors Energy vs. Organic Sales and | Nabors Energy vs. Tencent Music Entertainment | Nabors Energy vs. Global E Online |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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