Correlation Between NL Industries and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both NL Industries and Nabors Energy 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 NL Industries and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Nabors Energy Transition, you can compare the effects of market volatilities on NL Industries and Nabors Energy 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 NL Industries with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Nabors Energy.
Diversification Opportunities for NL Industries and Nabors Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between NL Industries and Nabors is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition and NL Industries 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 NL Industries are associated (or correlated) with Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of NL Industries i.e., NL Industries and Nabors Energy go up and down completely randomly.
Pair Corralation between NL Industries and Nabors Energy
Allowing for the 90-day total investment horizon NL Industries is expected to under-perform the Nabors Energy. In addition to that, NL Industries is 25.87 times more volatile than Nabors Energy Transition. It trades about -0.06 of its total potential returns per unit of risk. Nabors Energy Transition is currently generating about -0.23 per unit of volatility. If you would invest 1,084 in Nabors Energy Transition on November 6, 2024 and sell it today you would lose (7.00) from holding Nabors Energy Transition or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Nabors Energy Transition
Performance |
| Timeline |
| NL Industries |
| Nabors Energy Transition |
NL Industries and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Nabors Energy
The main advantage of trading using opposite NL Industries and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries position performs unexpectedly, Nabors Energy 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 Nabors Energy will offset losses from the drop in Nabors Energy's long position.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| Nabors Energy vs. Monster Beverage Corp | Nabors Energy vs. Lithia Motors | Nabors Energy vs. Molson Coors Beverage | Nabors Energy vs. Asbury Automotive Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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