Correlation Between Nabors Industries and Inspire Veterinary

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

By analyzing existing cross correlation between Nabors Industries and Inspire Veterinary Partners,, you can compare the effects of market volatilities on Nabors Industries and Inspire Veterinary 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 Inspire Veterinary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Inspire Veterinary.

Diversification Opportunities for Nabors Industries and Inspire Veterinary

0.07

Correlation Coefficient

Nabors Industries  Inspire Veterinary

Significant diversification

The 3 months correlation between Nabors and Inspire is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Inspire Veterinary Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Veterinary 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 Inspire Veterinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Veterinary has no effect on the direction of Nabors Industries i.e., Nabors Industries and Inspire Veterinary go up and down completely randomly.

Pair Corralation between Nabors Industries and Inspire Veterinary

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Inspire Veterinary. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 5.16 times less risky than Inspire Veterinary. The stock trades about -0.04 of its potential returns per unit of risk. The Inspire Veterinary Partners, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Inspire Veterinary Partners, on September 29, 2024 and sell it today you would lose (123.00) from holding Inspire Veterinary Partners, or give up 86.62% of portfolio value over 90 days.

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

Nabors Industries  vs.  Inspire Veterinary Partners,

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 conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Inspire Veterinary

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabors Industries and Inspire Veterinary

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

The idea behind Nabors Industries and Inspire Veterinary Partners, 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.