Correlation Between Nabors Industries and Eastern

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

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

Diversification Opportunities for Nabors Industries and Eastern

0.3

Correlation Coefficient

Nabors Industries  Eastern

Weak diversification

The 3 months correlation between Nabors and Eastern is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Nabors Industries i.e., Nabors Industries and Eastern go up and down completely randomly.

Pair Corralation between Nabors Industries and Eastern

Assuming the 90 days horizon Nabors Industries is expected to under-perform the Eastern. In addition to that, Nabors Industries is 2.17 times more volatile than Eastern Co. It trades about -0.04 of its total potential returns per unit of risk. Eastern Co is currently generating about 0.03 per unit of volatility. If you would invest  2,230  in Eastern Co on October 4, 2024 and sell it today you would earn a total of  424.00  from holding Eastern Co or generate 19.01% return on investment over 90 days.

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

Nabors Industries  vs.  Eastern Co

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. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nabors Industries and Eastern

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

The idea behind Nabors Industries and Eastern Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.