Correlation Between Nabors Industries and Boston Beer

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

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

Diversification Opportunities for Nabors Industries and Boston Beer

-0.07

Correlation Coefficient

Nabors Industries  Boston Beer

Good diversification

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

Pair Corralation between Nabors Industries and Boston Beer

Considering the 90-day investment horizon Nabors Industries is expected to generate 2.27 times more return on investment than Boston Beer. However, Nabors Industries is 2.27 times more volatile than Boston Beer. It trades about -0.11 of its potential returns per unit of risk. Boston Beer is currently generating about -0.42 per unit of risk. If you would invest  6,818  in Nabors Industries on October 11, 2024 and sell it today you would lose (594.00) from holding Nabors Industries or give up 8.71% of portfolio value over 90 days.

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

Nabors Industries  vs.  Boston Beer

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

Boston Beer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boston Beer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nabors Industries and Boston Beer

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

The idea behind Nabors Industries and Boston Beer 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .