Correlation Between Nabors Energy and AllianceBernstein

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

Diversification Opportunities for Nabors Energy and AllianceBernstein

-0.25

Correlation Coefficient

Nabors Energy  AllianceBernstein

Very good diversification

The 3 months correlation between Nabors and AllianceBernstein is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein 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 AllianceBernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianceBernstein has no effect on the direction of Nabors Energy i.e., Nabors Energy and AllianceBernstein go up and down completely randomly.

Pair Corralation between Nabors Energy and AllianceBernstein

Assuming the 90 days horizon Nabors Energy Transition is expected to generate 7.78 times more return on investment than AllianceBernstein. However, Nabors Energy is 7.78 times more volatile than AllianceBernstein Holding LP. It trades about 0.06 of its potential returns per unit of risk. AllianceBernstein Holding LP is currently generating about 0.1 per unit of risk. If you would invest  15.00  in Nabors Energy Transition on October 21, 2024 and sell it today you would earn a total of  0.00  from holding Nabors Energy Transition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.01%
Values	Daily Returns

Nabors Energy Transition  vs.  AllianceBernstein Holding LP

Nabors Energy Transition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

AllianceBernstein

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, AllianceBernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nabors Energy and AllianceBernstein

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

The idea behind Nabors Energy Transition and AllianceBernstein Holding LP 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.