Correlation Between Chart Industries and Nabors Energy

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Can any of the company-specific risk be diversified away by investing in both Chart Industries 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 Chart Industries and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chart Industries and Nabors Energy Transition, you can compare the effects of market volatilities on Chart Industries 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 Chart Industries with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Nabors Energy.

Diversification Opportunities for Chart Industries and Nabors Energy

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chart and Nabors is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries 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 Chart Industries 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 Chart Industries 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 Chart Industries i.e., Chart Industries and Nabors Energy go up and down completely randomly.

Pair Corralation between Chart Industries and Nabors Energy

Given the investment horizon of 90 days Chart Industries is expected to generate 14.05 times more return on investment than Nabors Energy. However, Chart Industries is 14.05 times more volatile than Nabors Energy Transition. It trades about 0.04 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.09 per unit of risk. If you would invest  13,298  in Chart Industries on October 4, 2024 and sell it today you would earn a total of  5,786  from holding Chart Industries or generate 43.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy75.2%
ValuesDaily Returns

Chart Industries  vs.  Nabors Energy Transition

 Performance 
       Timeline  
Chart Industries 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.
Nabors Energy Transition 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nabors Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chart Industries and Nabors Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chart Industries and Nabors Energy

The main advantage of trading using opposite Chart Industries and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries 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 Chart Industries 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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