Correlation Between Nabors Energy and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings, you can compare the effects of market volatilities on Nabors Energy and Kenon Holdings 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 Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Kenon Holdings.
Diversification Opportunities for Nabors Energy and Kenon Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nabors and Kenon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings 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 Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of Nabors Energy i.e., Nabors Energy and Kenon Holdings go up and down completely randomly.
Pair Corralation between Nabors Energy and Kenon Holdings
Given the investment horizon of 90 days Nabors Energy is expected to generate 12.04 times less return on investment than Kenon Holdings. But when comparing it to its historical volatility, Nabors Energy Transition is 5.17 times less risky than Kenon Holdings. It trades about 0.05 of its potential returns per unit of risk. Kenon Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,378 in Kenon Holdings on November 3, 2024 and sell it today you would earn a total of 695.00 from holding Kenon Holdings or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Energy Transition vs. Kenon Holdings
Performance |
| Timeline |
| Nabors Energy Transition |
| Kenon Holdings |
Nabors Energy and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Energy and Kenon Holdings
The main advantage of trading using opposite Nabors Energy and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Energy position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| Nabors Energy vs. Valneva SE ADR | Nabors Energy vs. Ironveld Plc | Nabors Energy vs. Abcellera Biologics | Nabors Energy vs. Apogee Therapeutics, Common |
| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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