Correlation Between Broad Capital and Nabors Energy

Can any of the company-specific risk be diversified away by investing in both Broad Capital and Nabors Energy 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 Broad Capital and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broad Capital Acquisition and Nabors Energy Transition, you can compare the effects of market volatilities on Broad Capital and Nabors Energy 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 Broad Capital with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Nabors Energy.

Diversification Opportunities for Broad Capital and Nabors Energy

-0.47

Correlation Coefficient

Broad Capital  Nabors Energy

Very good diversification

The 3 months correlation between Broad and Nabors is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Broad Capital i.e., Broad Capital and Nabors Energy go up and down completely randomly.

Pair Corralation between Broad Capital and Nabors Energy

If you would invest  13.00  in Nabors Energy Transition on October 4, 2024 and sell it today you would earn a total of  3.00  from holding Nabors Energy Transition or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Broad Capital Acquisition  vs.  Nabors Energy Transition

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Broad Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nabors Energy Transition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broad Capital and Nabors Energy

The main advantage of trading using opposite Broad Capital and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, Nabors Energy 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 Energy will offset losses from the drop in Nabors Energy's long position.

The idea behind Broad Capital Acquisition and Nabors Energy Transition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.