Correlation Between Broadleaf and Nabors Industries

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

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

Diversification Opportunities for Broadleaf and Nabors Industries

-0.24

Correlation Coefficient

Broadleaf  Nabors Industries

Very good diversification

The 3 months correlation between Broadleaf and Nabors is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Broadleaf Co and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Broadleaf 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 Broadleaf Co 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 Broadleaf i.e., Broadleaf and Nabors Industries go up and down completely randomly.

Pair Corralation between Broadleaf and Nabors Industries

Assuming the 90 days horizon Broadleaf is expected to generate 25.36 times less return on investment than Nabors Industries. But when comparing it to its historical volatility, Broadleaf Co is 225.13 times less risky than Nabors Industries. It trades about 0.22 of its potential returns per unit of risk. Nabors Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  460.00  in Nabors Industries on October 11, 2024 and sell it today you would lose (20.00) from holding Nabors Industries or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Broadleaf Co  vs.  Nabors Industries

Broadleaf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadleaf Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Broadleaf is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Broadleaf and Nabors Industries

The main advantage of trading using opposite Broadleaf and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadleaf 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.

The idea behind Broadleaf Co and Nabors Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.