Correlation Between Nabors Energy and Diamond Hill

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

Diversification Opportunities for Nabors Energy and Diamond Hill

-0.04

Correlation Coefficient

Nabors Energy  Diamond Hill

Good diversification

The 3 months correlation between Nabors and Diamond is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Nabors Energy i.e., Nabors Energy and Diamond Hill go up and down completely randomly.

Pair Corralation between Nabors Energy and Diamond Hill

Assuming the 90 days horizon Nabors Energy Transition is expected to generate 6.34 times more return on investment than Diamond Hill. However, Nabors Energy is 6.34 times more volatile than Diamond Hill Investment. It trades about 0.17 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.02 per unit of risk. If you would invest  10.00  in Nabors Energy Transition on October 6, 2024 and sell it today you would earn a total of  8.00  from holding Nabors Energy Transition or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.42%
Values	Daily Returns

Nabors Energy Transition  vs.  Diamond Hill Investment

Nabors Energy Transition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Diamond Hill Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nabors Energy and Diamond Hill

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

The idea behind Nabors Energy Transition and Diamond Hill Investment 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 CEOs Directory module to screen CEOs from public companies around the world.