Correlation Between Nabors Industries and Diamond Offshore
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Diamond Offshore 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 Nabors Industries and Diamond Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Diamond Offshore Drilling, you can compare the effects of market volatilities on Nabors Industries and Diamond Offshore 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 Nabors Industries with a short position of Diamond Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Diamond Offshore.
Diversification Opportunities for Nabors Industries and Diamond Offshore
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nabors and Diamond is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Diamond Offshore Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Offshore Drilling and Nabors Industries 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 Nabors Industries are associated (or correlated) with Diamond Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Offshore Drilling has no effect on the direction of Nabors Industries i.e., Nabors Industries and Diamond Offshore go up and down completely randomly.
Pair Corralation between Nabors Industries and Diamond Offshore
Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Diamond Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Nabors Industries is 1.0 times less risky than Diamond Offshore. The stock trades about -0.06 of its potential returns per unit of risk. The Diamond Offshore Drilling is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,153 in Diamond Offshore Drilling on January 20, 2024 and sell it today you would earn a total of 133.00 from holding Diamond Offshore Drilling or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nabors Industries vs. Diamond Offshore Drilling
Performance |
| Timeline |
| Nabors Industries |
| Diamond Offshore Drilling |
Nabors Industries and Diamond Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nabors Industries and Diamond Offshore
The main advantage of trading using opposite Nabors Industries and Diamond Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Diamond Offshore 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 Diamond Offshore will offset losses from the drop in Diamond Offshore's long position.| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Diamond Offshore Drilling | Nabors Industries vs. Seadrill Limited |
| Diamond Offshore vs. Seadrill Limited | Diamond Offshore vs. Nabors Industries | Diamond Offshore vs. Borr Drilling | Diamond Offshore vs. Patterson UTI Energy |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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