Correlation Between Noble Plc and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Noble Plc 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 Noble Plc and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and Nabors Industries, you can compare the effects of market volatilities on Noble Plc 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 Noble Plc with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Nabors Industries.
Diversification Opportunities for Noble Plc and Nabors Industries
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Noble and Nabors is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Noble Plc 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 Noble plc 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 Noble Plc i.e., Noble Plc and Nabors Industries go up and down completely randomly.
Pair Corralation between Noble Plc and Nabors Industries
Allowing for the 90-day total investment horizon Noble plc is expected to generate 0.6 times more return on investment than Nabors Industries. However, Noble plc is 1.68 times less risky than Nabors Industries. It trades about -0.14 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.34 per unit of risk. If you would invest 4,828 in Noble plc on January 19, 2024 and sell it today you would lose (207.00) from holding Noble plc or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noble plc vs. Nabors Industries
Performance |
| Timeline |
| Noble plc |
| Nabors Industries |
Noble Plc and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and Nabors Industries
The main advantage of trading using opposite Noble Plc and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc 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.| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Diamond Offshore Drilling | Nabors Industries vs. Seadrill Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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