Correlation Between Nabors Industries and Contango ORE

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

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

Diversification Opportunities for Nabors Industries and Contango ORE

0.75

Correlation Coefficient

Nabors Industries  Contango ORE

Poor diversification

The 3 months correlation between Nabors and Contango is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE and Nabors 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 Nabors Industries are associated (or correlated) with Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Nabors Industries i.e., Nabors Industries and Contango ORE go up and down completely randomly.

Pair Corralation between Nabors Industries and Contango ORE

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Contango ORE. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 1.18 times less risky than Contango ORE. The stock trades about -0.04 of its potential returns per unit of risk. The Contango ORE is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Contango ORE on October 27, 2024 and sell it today you would lose (1,306) from holding Contango ORE or give up 54.42% of portfolio value over 90 days.

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

Nabors Industries  vs.  Contango ORE

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. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nabors Industries and Contango ORE

The main advantage of trading using opposite Nabors Industries and Contango ORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Contango ORE 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 Contango ORE will offset losses from the drop in Contango ORE's long position.

The idea behind Nabors Industries and Contango ORE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.