Correlation Between NESNVX and Nabors Industries

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

By analyzing existing cross correlation between NESNVX 125 15 SEP 30 and Nabors Industries, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Nabors Industries.

Diversification Opportunities for NESNVX and Nabors Industries

0.21

Correlation Coefficient

NESNVX  Nabors Industries

Modest diversification

The 3 months correlation between NESNVX and Nabors is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 125 15 SEP 30 and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and NESNVX 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 NESNVX 125 15 SEP 30 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 NESNVX i.e., NESNVX and Nabors Industries go up and down completely randomly.

Pair Corralation between NESNVX and Nabors Industries

Assuming the 90 days trading horizon NESNVX 125 15 SEP 30 is expected to generate 0.24 times more return on investment than Nabors Industries. However, NESNVX 125 15 SEP 30 is 4.15 times less risky than Nabors Industries. It trades about 0.0 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.04 per unit of risk. If you would invest  8,045  in NESNVX 125 15 SEP 30 on September 21, 2024 and sell it today you would lose (19.00) from holding NESNVX 125 15 SEP 30 or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.71%
Values	Daily Returns

NESNVX 125 15 SEP 30  vs.  Nabors Industries

NESNVX 125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 125 15 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 125 15 SEP 30 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 weak 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 NESNVX and Nabors Industries

The main advantage of trading using opposite NESNVX and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 125 15 SEP 30 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.