Correlation Between United Natural and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Nabors Industries, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Nabors Industries.
Diversification Opportunities for United Natural and Nabors Industries
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Nabors is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Nabors Industries go up and down completely randomly.
Pair Corralation between United Natural and Nabors Industries
Assuming the 90 days horizon United Natural Foods is expected to generate 0.95 times more return on investment than Nabors Industries. However, United Natural Foods is 1.05 times less risky than Nabors Industries. It trades about 0.34 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.04 per unit of risk. If you would invest 1,888 in United Natural Foods on September 1, 2024 and sell it today you would earn a total of 402.00 from holding United Natural Foods or generate 21.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Natural Foods vs. Nabors Industries
Performance |
| Timeline |
| United Natural Foods |
| Nabors Industries |
United Natural and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Nabors Industries
The main advantage of trading using opposite United Natural and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Performance Food Group | United Natural vs. US Foods Holding |
| Nabors Industries vs. CarsalesCom | Nabors Industries vs. GEELY AUTOMOBILE | Nabors Industries vs. Datang International Power | Nabors Industries vs. Science Applications International |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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