Correlation Between Nabors Energy and VirnetX Holding

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

Diversification Opportunities for Nabors Energy and VirnetX Holding

-0.51

Correlation Coefficient

Nabors Energy  VirnetX Holding

Excellent diversification

The 3 months correlation between Nabors and VirnetX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding 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 VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of Nabors Energy i.e., Nabors Energy and VirnetX Holding go up and down completely randomly.

Pair Corralation between Nabors Energy and VirnetX Holding

Assuming the 90 days horizon Nabors Energy Transition is expected to generate 1.72 times more return on investment than VirnetX Holding. However, Nabors Energy is 1.72 times more volatile than VirnetX Holding Corp. It trades about 0.06 of its potential returns per unit of risk. VirnetX Holding Corp is currently generating about 0.05 per unit of risk. If you would invest  17.00  in Nabors Energy Transition on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Nabors Energy Transition or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.96%
Values	Daily Returns

Nabors Energy Transition  vs.  VirnetX Holding Corp

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.

VirnetX Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Energy and VirnetX Holding

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

The idea behind Nabors Energy Transition and VirnetX Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.