Correlation Between Xponential Fitness and Nabors Industries

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

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

Diversification Opportunities for Xponential Fitness and Nabors Industries

0.5

Correlation Coefficient

Xponential Fitness  Nabors Industries

Very weak diversification

The 3 months correlation between Xponential and Nabors is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Nabors Industries go up and down completely randomly.

Pair Corralation between Xponential Fitness and Nabors Industries

Given the investment horizon of 90 days Xponential Fitness is expected to under-perform the Nabors Industries. In addition to that, Xponential Fitness is 1.77 times more volatile than Nabors Industries. It trades about -0.07 of its total potential returns per unit of risk. Nabors Industries is currently generating about -0.04 per unit of volatility. If you would invest  5,119  in Nabors Industries on December 27, 2024 and sell it today you would lose (691.00) from holding Nabors Industries or give up 13.5% of portfolio value over 90 days.

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

Xponential Fitness  vs.  Nabors Industries

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nabors Industries

Risk-Adjusted Performance

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 latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Xponential Fitness and Nabors Industries

The main advantage of trading using opposite Xponential Fitness and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.