Correlation Between Nabors Energy and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Dynex 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 Dynex 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 Dynex Capital, you can compare the effects of market volatilities on Nabors Energy and Dynex 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 Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Dynex Capital.
Diversification Opportunities for Nabors Energy and Dynex Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nabors and Dynex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex 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 Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Nabors Energy i.e., Nabors Energy and Dynex Capital go up and down completely randomly.
Pair Corralation between Nabors Energy and Dynex Capital
Assuming the 90 days horizon Nabors Energy Transition is expected to generate 18.71 times more return on investment than Dynex Capital. However, Nabors Energy is 18.71 times more volatile than Dynex Capital. It trades about 0.28 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.18 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 | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Nabors Energy Transition vs. Dynex Capital
Performance |
| Timeline |
| Nabors Energy Transition |
| Dynex Capital |
Nabors Energy and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Energy and Dynex Capital
The main advantage of trading using opposite Nabors Energy and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Energy position performs unexpectedly, Dynex 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 Dynex Capital will offset losses from the drop in Dynex Capital's long position.| Nabors Energy vs. Citizens | Nabors Energy vs. Trupanion | Nabors Energy vs. QBE Insurance Group | Nabors Energy vs. Relx PLC ADR |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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