Correlation Between FEDEX and Nabors Industries

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

By analyzing existing cross correlation between FEDEX P 42 and Nabors Industries, you can compare the effects of market volatilities on FEDEX 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 FEDEX with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEDEX and Nabors Industries.

Diversification Opportunities for FEDEX and Nabors Industries

-0.18

Correlation Coefficient

FEDEX  Nabors Industries

Good diversification

The 3 months correlation between FEDEX and Nabors is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FEDEX P 42 and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and FEDEX 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 FEDEX P 42 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 FEDEX i.e., FEDEX and Nabors Industries go up and down completely randomly.

Pair Corralation between FEDEX and Nabors Industries

Assuming the 90 days trading horizon FEDEX P 42 is expected to under-perform the Nabors Industries. But the bond apears to be less risky and, when comparing its historical volatility, FEDEX P 42 is 2.08 times less risky than Nabors Industries. The bond trades about -0.06 of its potential returns per unit of risk. The Nabors Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,620  in Nabors Industries on September 18, 2024 and sell it today you would lose (448.00) from holding Nabors Industries or give up 6.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

FEDEX P 42  vs.  Nabors Industries

FEDEX P 42

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 relatively invariable fundamental drivers, Nabors Industries is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FEDEX and Nabors Industries

The main advantage of trading using opposite FEDEX and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEDEX 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 FEDEX P 42 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.