Correlation Between Nabors Industries and Ziff Davis

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

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

Diversification Opportunities for Nabors Industries and Ziff Davis

-0.37

Correlation Coefficient

Nabors Industries  Ziff Davis

Very good diversification

The 3 months correlation between Nabors and Ziff is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis 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 Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Nabors Industries i.e., Nabors Industries and Ziff Davis go up and down completely randomly.

Pair Corralation between Nabors Industries and Ziff Davis

Assuming the 90 days horizon Nabors Industries is expected to under-perform the Ziff Davis. In addition to that, Nabors Industries is 2.52 times more volatile than Ziff Davis. It trades about -0.08 of its total potential returns per unit of risk. Ziff Davis is currently generating about 0.13 per unit of volatility. If you would invest  4,466  in Ziff Davis on October 4, 2024 and sell it today you would earn a total of  968.00  from holding Ziff Davis or generate 21.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nabors Industries  vs.  Ziff Davis

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.

Ziff Davis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Industries and Ziff Davis

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

The idea behind Nabors Industries and Ziff Davis 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.