Correlation Between Nabors Energy and Deutsche Bank

Can any of the company-specific risk be diversified away by investing in both Nabors Energy and Deutsche Bank 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 Deutsche Bank 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 Deutsche Bank AG, you can compare the effects of market volatilities on Nabors Energy and Deutsche Bank 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 Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and Deutsche Bank.

Diversification Opportunities for Nabors Energy and Deutsche Bank

0.1

Correlation Coefficient

Nabors Energy  Deutsche Bank

Average diversification

The 3 months correlation between Nabors and Deutsche is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank AG has no effect on the direction of Nabors Energy i.e., Nabors Energy and Deutsche Bank go up and down completely randomly.

Pair Corralation between Nabors Energy and Deutsche Bank

Assuming the 90 days horizon Nabors Energy is expected to generate 1.56 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Nabors Energy Transition is 4.83 times less risky than Deutsche Bank. It trades about 0.4 of its potential returns per unit of risk. Deutsche Bank AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,648  in Deutsche Bank AG on September 25, 2024 and sell it today you would earn a total of  70.00  from holding Deutsche Bank AG or generate 4.25% return on investment over 90 days.

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

Nabors Energy Transition  vs.  Deutsche Bank AG

Nabors Energy Transition

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 16 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Deutsche Bank AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Deutsche Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nabors Energy and Deutsche Bank

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

The idea behind Nabors Energy Transition and Deutsche Bank AG 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..