Correlation Between Pinterest and Nabors Industries

Can any of the company-specific risk be diversified away by investing in both Pinterest and Nabors Industries 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 Pinterest and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pinterest and Nabors Industries, you can compare the effects of market volatilities on Pinterest and Nabors Industries 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 Pinterest with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and Nabors Industries.

Diversification Opportunities for Pinterest and Nabors Industries

0.29

Correlation Coefficient

Pinterest  Nabors Industries

Modest diversification

The 3 months correlation between Pinterest and Nabors is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Pinterest 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 Pinterest are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Pinterest i.e., Pinterest and Nabors Industries go up and down completely randomly.

Pair Corralation between Pinterest and Nabors Industries

Given the investment horizon of 90 days Pinterest is expected to generate 0.99 times more return on investment than Nabors Industries. However, Pinterest is 1.01 times less risky than Nabors Industries. It trades about 0.02 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.71 per unit of risk. If you would invest  2,931  in Pinterest on September 22, 2024 and sell it today you would earn a total of  18.00  from holding Pinterest or generate 0.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pinterest  vs.  Nabors Industries

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Pinterest and Nabors Industries

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

The idea behind Pinterest and Nabors Industries 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.