Correlation Between Nabors Energy and Auxly Cannabis

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

By analyzing existing cross correlation between Nabors Energy Transition and Auxly Cannabis Group, you can compare the effects of market volatilities on Nabors Energy and Auxly Cannabis 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 Energy with a short position of Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Auxly Cannabis.

Diversification Opportunities for Nabors Energy and Auxly Cannabis

-0.59

Correlation Coefficient

Nabors Energy  Auxly Cannabis

Excellent diversification

The 3 months correlation between Nabors and Auxly is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Nabors Energy 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 Energy Transition are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Nabors Energy i.e., Nabors Energy and Auxly Cannabis go up and down completely randomly.

Pair Corralation between Nabors Energy and Auxly Cannabis

Assuming the 90 days horizon Nabors Energy is expected to generate 2.8 times less return on investment than Auxly Cannabis. But when comparing it to its historical volatility, Nabors Energy Transition is 16.99 times less risky than Auxly Cannabis. It trades about 0.19 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.70  in Auxly Cannabis Group on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Auxly Cannabis Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Nabors Energy Transition  vs.  Auxly Cannabis Group

Nabors Energy Transition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nabors Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Auxly Cannabis Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auxly Cannabis Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Auxly Cannabis may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nabors Energy and Auxly Cannabis

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

The idea behind Nabors Energy Transition and Auxly Cannabis Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.