Correlation Between ATRenew and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both ATRenew and Nabors Energy 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 ATRenew and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATRenew Inc DRC and Nabors Energy Transition, you can compare the effects of market volatilities on ATRenew and Nabors Energy 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 ATRenew with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and Nabors Energy.
Diversification Opportunities for ATRenew and Nabors Energy
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ATRenew and Nabors is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition and ATRenew 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 ATRenew Inc DRC are associated (or correlated) with Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of ATRenew i.e., ATRenew and Nabors Energy go up and down completely randomly.
Pair Corralation between ATRenew and Nabors Energy
Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 22.03 times more return on investment than Nabors Energy. However, ATRenew is 22.03 times more volatile than Nabors Energy Transition. It trades about 0.08 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.1 per unit of risk. If you would invest 220.00 in ATRenew Inc DRC on October 24, 2024 and sell it today you would earn a total of 50.00 from holding ATRenew Inc DRC or generate 22.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ATRenew Inc DRC vs. Nabors Energy Transition
Performance |
Timeline |
ATRenew Inc DRC |
Nabors Energy Transition |
ATRenew and Nabors Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ATRenew and Nabors Energy
The main advantage of trading using opposite ATRenew and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRenew position performs unexpectedly, Nabors Energy 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 Energy will offset losses from the drop in Nabors Energy's long position.The idea behind ATRenew Inc DRC and Nabors Energy Transition 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.Nabors Energy vs. Visa Class A | Nabors Energy vs. Diamond Hill Investment | Nabors Energy vs. Distoken Acquisition | Nabors Energy vs. AllianceBernstein Holding LP |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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