Correlation Between Nabors Industries and United Natural

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

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

Diversification Opportunities for Nabors Industries and United Natural

-0.77

Correlation Coefficient

Nabors Industries  United Natural

Pay attention - limited upside

The 3 months correlation between Nabors and United is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Nabors Industries i.e., Nabors Industries and United Natural go up and down completely randomly.

Pair Corralation between Nabors Industries and United Natural

Assuming the 90 days horizon Nabors Industries is expected to generate 3.29 times less return on investment than United Natural. In addition to that, Nabors Industries is 1.98 times more volatile than United Natural Foods. It trades about 0.03 of its total potential returns per unit of risk. United Natural Foods is currently generating about 0.16 per unit of volatility. If you would invest  2,468  in United Natural Foods on October 10, 2024 and sell it today you would earn a total of  397.00  from holding United Natural Foods or generate 16.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Nabors Industries  vs.  United Natural Foods

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 inconsistent 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.

United Natural Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Industries and United Natural

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

The idea behind Nabors Industries and United Natural Foods 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.