Correlation Between Nabors Energy and Keyera Corp

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

Diversification Opportunities for Nabors Energy and Keyera Corp

-0.66

Correlation Coefficient

Nabors Energy  Keyera Corp

Excellent diversification

The 3 months correlation between Nabors and Keyera is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Keyera Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyera Corp 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 Keyera Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyera Corp has no effect on the direction of Nabors Energy i.e., Nabors Energy and Keyera Corp go up and down completely randomly.

Pair Corralation between Nabors Energy and Keyera Corp

Assuming the 90 days horizon Nabors Energy is expected to generate 3.67 times less return on investment than Keyera Corp. But when comparing it to its historical volatility, Nabors Energy Transition is 5.46 times less risky than Keyera Corp. It trades about 0.1 of its potential returns per unit of risk. Keyera Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,995  in Keyera Corp on September 30, 2024 and sell it today you would earn a total of  1,011  from holding Keyera Corp or generate 50.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.45%
Values	Daily Returns

Nabors Energy Transition  vs.  Keyera Corp

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.

Keyera Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyera Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Keyera Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nabors Energy and Keyera Corp

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

The idea behind Nabors Energy Transition and Keyera Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.