Correlation Between Eos Energy and Nabors Industries

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

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

Diversification Opportunities for Eos Energy and Nabors Industries

-0.68

Correlation Coefficient

Eos Energy  Nabors Industries

Excellent diversification

The 3 months correlation between Eos and Nabors is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Eos Energy 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 Eos Energy Enterprises 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 Eos Energy i.e., Eos Energy and Nabors Industries go up and down completely randomly.

Pair Corralation between Eos Energy and Nabors Industries

Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 1.02 times more return on investment than Nabors Industries. However, Eos Energy is 1.02 times more volatile than Nabors Industries. It trades about 0.56 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.36 per unit of risk. If you would invest  251.00  in Eos Energy Enterprises on September 22, 2024 and sell it today you would earn a total of  206.00  from holding Eos Energy Enterprises or generate 82.07% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Nabors Industries

Eos Energy Enterprises

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Eos Energy and Nabors Industries

The main advantage of trading using opposite Eos Energy and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy 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 Eos Energy Enterprises 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.