Correlation Between Brunswick and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Nabors Industries, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Nabors Industries.
Diversification Opportunities for Brunswick and Nabors Industries
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brunswick and Nabors is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Nabors Industries go up and down completely randomly.
Pair Corralation between Brunswick and Nabors Industries
Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.5 times more return on investment than Nabors Industries. However, Brunswick is 2.0 times less risky than Nabors Industries. It trades about -0.26 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.29 per unit of risk. If you would invest 7,835 in Brunswick on December 4, 2024 and sell it today you would lose (1,934) from holding Brunswick or give up 24.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Brunswick vs. Nabors Industries
Performance |
Timeline |
Brunswick |
Nabors Industries |
Brunswick and Nabors Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brunswick and Nabors Industries
The main advantage of trading using opposite Brunswick and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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