Correlation Between Delek Drilling and Nabors Industries

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

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

Diversification Opportunities for Delek Drilling and Nabors Industries

-0.62

Correlation Coefficient

Delek Drilling  Nabors Industries

Excellent diversification

The 3 months correlation between Delek and Nabors is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Delek Drilling 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 Delek Drilling 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 Delek Drilling i.e., Delek Drilling and Nabors Industries go up and down completely randomly.

Pair Corralation between Delek Drilling and Nabors Industries

Assuming the 90 days horizon Delek Drilling is expected to generate 0.54 times more return on investment than Nabors Industries. However, Delek Drilling is 1.84 times less risky than Nabors Industries. It trades about 0.07 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.09 per unit of risk. If you would invest  327.00  in Delek Drilling on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Delek Drilling or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Delek Drilling   vs.  Nabors Industries

Delek Drilling

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nabors Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Delek Drilling and Nabors Industries

The main advantage of trading using opposite Delek Drilling and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling 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 Delek Drilling 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.