Correlation Between SL Green and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both SL Green 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 SL Green and Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Nabors Energy Transition, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Nabors Energy.
Diversification Opportunities for SL Green and Nabors Energy
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SLG and Nabors is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty 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 SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Nabors Energy go up and down completely randomly.
Pair Corralation between SL Green and Nabors Energy
Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Nabors Energy. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 10.23 times less risky than Nabors Energy. The stock trades about -0.12 of its potential returns per unit of risk. The Nabors Energy Transition is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Nabors Energy Transition on December 18, 2024 and sell it today you would earn a total of 23.00 from holding Nabors Energy Transition or generate 143.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 81.36% |
Values | Daily Returns |
SL Green Realty vs. Nabors Energy Transition
Performance |
Timeline |
SL Green Realty |
Nabors Energy Transition |
SL Green and Nabors Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SL Green and Nabors Energy
The main advantage of trading using opposite SL Green and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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.SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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