Correlation Between Nabors Energy and Associated Capital
Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Associated Capital 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 Associated Capital 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 Associated Capital Group, you can compare the effects of market volatilities on Nabors Energy and Associated Capital 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 Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Associated Capital.
Diversification Opportunities for Nabors Energy and Associated Capital
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nabors and Associated is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital 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 Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Nabors Energy i.e., Nabors Energy and Associated Capital go up and down completely randomly.
Pair Corralation between Nabors Energy and Associated Capital
Assuming the 90 days horizon Nabors Energy Transition is expected to generate 8.88 times more return on investment than Associated Capital. However, Nabors Energy is 8.88 times more volatile than Associated Capital Group. It trades about 0.28 of its potential returns per unit of risk. Associated Capital Group is currently generating about -0.02 per unit of risk. If you would invest 10.00 in Nabors Energy Transition on September 12, 2024 and sell it today you would earn a total of 6.50 from holding Nabors Energy Transition or generate 65.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Nabors Energy Transition vs. Associated Capital Group
Performance |
| Timeline |
| Nabors Energy Transition |
| Associated Capital |
Nabors Energy and Associated Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Energy and Associated Capital
The main advantage of trading using opposite Nabors Energy and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Energy position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.| Nabors Energy vs. Citizens | Nabors Energy vs. Trupanion | Nabors Energy vs. QBE Insurance Group | Nabors Energy vs. Relx PLC ADR |
| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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