Correlation Between Tenaris SA and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Tenaris SA 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 Tenaris SA and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and Nabors Industries, you can compare the effects of market volatilities on Tenaris SA 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 Tenaris SA with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Nabors Industries.
Diversification Opportunities for Tenaris SA and Nabors Industries
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tenaris and Nabors is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Tenaris SA 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 Tenaris SA ADR 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 Tenaris SA i.e., Tenaris SA and Nabors Industries go up and down completely randomly.
Pair Corralation between Tenaris SA and Nabors Industries
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.42 times more return on investment than Nabors Industries. However, Tenaris SA ADR is 2.37 times less risky than Nabors Industries. It trades about 0.08 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.02 per unit of risk. If you would invest 3,250 in Tenaris SA ADR on August 29, 2024 and sell it today you would earn a total of 559.00 from holding Tenaris SA ADR or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Nabors Industries
Performance |
| Timeline |
| Tenaris SA ADR |
| Nabors Industries |
Tenaris SA and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Nabors Industries
The main advantage of trading using opposite Tenaris SA and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA 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.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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