Correlation Between NYSE Composite and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nabors Industries, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nabors Industries.
Diversification Opportunities for NYSE Composite and Nabors Industries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Nabors is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Nabors Industries go up and down completely randomly.
Pair Corralation between NYSE Composite and Nabors Industries
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.36 times less return on investment than Nabors Industries. But when comparing it to its historical volatility, NYSE Composite is 4.81 times less risky than Nabors Industries. It trades about 0.21 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,287 in Nabors Industries on August 27, 2024 and sell it today you would earn a total of 443.00 from holding Nabors Industries or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nabors Industries
Performance |
| Timeline |
NYSE Composite and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nabors Industries
Pair trading matchups for Nabors Industries
Pair Trading with NYSE Composite and Nabors Industries
The main advantage of trading using opposite NYSE Composite and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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