Correlation Between Nabors Industries and 512807AW8

Can any of the company-specific risk be diversified away by investing in both Nabors Industries and 512807AW8 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 512807AW8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nabors Industries and LAM RESEARCH PORATION, you can compare the effects of market volatilities on Nabors Industries and 512807AW8 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 512807AW8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and 512807AW8.

Diversification Opportunities for Nabors Industries and 512807AW8

0.27

Correlation Coefficient

Nabors Industries  512807AW8

Modest diversification

The 3 months correlation between Nabors and 512807AW8 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and LAM RESEARCH PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAM RESEARCH PORATION 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 512807AW8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAM RESEARCH PORATION has no effect on the direction of Nabors Industries i.e., Nabors Industries and 512807AW8 go up and down completely randomly.

Pair Corralation between Nabors Industries and 512807AW8

Considering the 90-day investment horizon Nabors Industries is expected to generate 4.83 times more return on investment than 512807AW8. However, Nabors Industries is 4.83 times more volatile than LAM RESEARCH PORATION. It trades about -0.06 of its potential returns per unit of risk. LAM RESEARCH PORATION is currently generating about -0.61 per unit of risk. If you would invest  6,777  in Nabors Industries on October 9, 2024 and sell it today you would lose (367.00) from holding Nabors Industries or give up 5.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Nabors Industries  vs.  LAM RESEARCH PORATION

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.

LAM RESEARCH PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAM RESEARCH PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 512807AW8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nabors Industries and 512807AW8

The main advantage of trading using opposite Nabors Industries and 512807AW8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, 512807AW8 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 512807AW8 will offset losses from the drop in 512807AW8's long position.

The idea behind Nabors Industries and LAM RESEARCH PORATION 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 .