Correlation Between Marchex and Nabors Industries

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

Diversification Opportunities for Marchex and Nabors Industries

MarchexNaborsDiversified AwayMarchexNaborsDiversified Away100%
-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Marchex and Nabors is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Marchex 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 Marchex 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 Marchex i.e., Marchex and Nabors Industries go up and down completely randomly.

Pair Corralation between Marchex and Nabors Industries

Given the investment horizon of 90 days Marchex is expected to generate 0.59 times more return on investment than Nabors Industries. However, Marchex is 1.69 times less risky than Nabors Industries. It trades about 0.06 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.03 per unit of risk. If you would invest  182.00  in Marchex on October 9, 2024 and sell it today you would earn a total of  21.00  from holding Marchex or generate 11.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Marchex  vs.  Nabors Industries

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -40-20020
JavaScript chart by amCharts 3.21.15MCHX NBRWF
       Timeline  
Marchex 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.61.71.81.922.12.22.32.4
Nabors Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan33.544.555.566.577.5

Marchex and Nabors Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.45-9.32-6.2-3.07-0.05213.16.319.5212.7315.94 0.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15MCHX NBRWF
       Returns  

Pair Trading with Marchex and Nabors Industries

The main advantage of trading using opposite Marchex and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marchex 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 Marchex 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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