Correlation Between NORWEGIAN AIR and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Nabors Industries 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 NORWEGIAN AIR and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Nabors Industries, you can compare the effects of market volatilities on NORWEGIAN AIR and Nabors Industries 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 NORWEGIAN AIR with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Nabors Industries.
Diversification Opportunities for NORWEGIAN AIR and Nabors Industries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORWEGIAN and Nabors is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Nabors Industries go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Nabors Industries
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to under-perform the Nabors Industries. But the stock apears to be less risky and, when comparing its historical volatility, NORWEGIAN AIR SHUT is 1.35 times less risky than Nabors Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Nabors Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,000 in Nabors Industries on September 3, 2024 and sell it today you would earn a total of 900.00 from holding Nabors Industries or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Nabors Industries
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Nabors Industries |
NORWEGIAN AIR and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Nabors Industries
The main advantage of trading using opposite NORWEGIAN AIR and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Nabors Industries 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 Industries will offset losses from the drop in Nabors Industries' long position.| NORWEGIAN AIR vs. TOTAL GABON | NORWEGIAN AIR vs. Walgreens Boots Alliance | NORWEGIAN AIR vs. Peak Resources Limited |
| Nabors Industries vs. NORWEGIAN AIR SHUT | Nabors Industries vs. Fair Isaac Corp | Nabors Industries vs. Rayonier Advanced Materials | Nabors Industries vs. Plastic Omnium |
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 Stocks Directory module to find actively traded stocks across global markets.
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