Correlation Between Nabors Industries and Zeo Energy

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

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

Diversification Opportunities for Nabors Industries and Zeo Energy

-0.66

Correlation Coefficient

Nabors Industries  Zeo Energy

Excellent diversification

The 3 months correlation between Nabors and Zeo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of Nabors Industries i.e., Nabors Industries and Zeo Energy go up and down completely randomly.

Pair Corralation between Nabors Industries and Zeo Energy

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Zeo Energy. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 2.59 times less risky than Zeo Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Zeo Energy Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,033  in Zeo Energy Corp on October 7, 2024 and sell it today you would lose (690.00) from holding Zeo Energy Corp or give up 66.8% of portfolio value over 90 days.

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

Nabors Industries  vs.  Zeo Energy Corp

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.

Zeo Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Zeo Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Industries and Zeo Energy

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

The idea behind Nabors Industries and Zeo Energy Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.