Correlation Between Nabors Energy and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Old Dominion 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 Old Dominion 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 Old Dominion Freight, you can compare the effects of market volatilities on Nabors Energy and Old Dominion 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 Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Old Dominion.
Diversification Opportunities for Nabors Energy and Old Dominion
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nabors and Old is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Nabors Energy i.e., Nabors Energy and Old Dominion go up and down completely randomly.
Pair Corralation between Nabors Energy and Old Dominion
Assuming the 90 days horizon Nabors Energy Transition is expected to generate 5.42 times more return on investment than Old Dominion. However, Nabors Energy is 5.42 times more volatile than Old Dominion Freight. It trades about 0.04 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.01 per unit of risk. If you would invest 23.00 in Nabors Energy Transition on November 5, 2024 and sell it today you would lose (8.00) from holding Nabors Energy Transition or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 48.18% |
| Values | Daily Returns |
Nabors Energy Transition vs. Old Dominion Freight
Performance |
| Timeline |
| Nabors Energy Transition |
| Old Dominion Freight |
Nabors Energy and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Energy and Old Dominion
The main advantage of trading using opposite Nabors Energy and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Energy position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.| Nabors Energy vs. Braemar Hotels Resorts | Nabors Energy vs. Xunlei Ltd Adr | Nabors Energy vs. One Group Hospitality | Nabors Energy vs. RCI Hospitality Holdings |
| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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