Correlation Between Nabors Industries and NATIONAL

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

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

Diversification Opportunities for Nabors Industries and NATIONAL

-0.54

Correlation Coefficient

Nabors Industries  NATIONAL

Excellent diversification

The 3 months correlation between Nabors and NATIONAL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS 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 NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of Nabors Industries i.e., Nabors Industries and NATIONAL go up and down completely randomly.

Pair Corralation between Nabors Industries and NATIONAL

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the NATIONAL. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 21.89 times less risky than NATIONAL. The stock trades about -0.02 of its potential returns per unit of risk. The NATIONAL RURAL UTILS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,838  in NATIONAL RURAL UTILS on September 4, 2024 and sell it today you would lose (414.00) from holding NATIONAL RURAL UTILS or give up 4.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.1%
Values	Daily Returns

Nabors Industries  vs.  NATIONAL RURAL UTILS

Nabors Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Nabors Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NATIONAL RURAL UTILS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabors Industries and NATIONAL

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

The idea behind Nabors Industries and NATIONAL RURAL UTILS 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 Anywhere module to track or share privately all of your investments from the convenience of any device.