Correlation Between Nabors Industries and GlaxoSmithKline PLC
Can any of the company-specific risk be diversified away by investing in both Nabors Industries and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and GlaxoSmithKline PLC ADR, you can compare the effects of market volatilities on Nabors Industries and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and GlaxoSmithKline PLC.
Diversification Opportunities for Nabors Industries and GlaxoSmithKline PLC
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nabors and GlaxoSmithKline is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and GlaxoSmithKline PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlaxoSmithKline PLC ADR has no effect on the direction of Nabors Industries i.e., Nabors Industries and GlaxoSmithKline PLC go up and down completely randomly.
Pair Corralation between Nabors Industries and GlaxoSmithKline PLC
Considering the 90-day investment horizon Nabors Industries is expected to generate 2.73 times more return on investment than GlaxoSmithKline PLC. However, Nabors Industries is 2.73 times more volatile than GlaxoSmithKline PLC ADR. It trades about -0.02 of its potential returns per unit of risk. GlaxoSmithKline PLC ADR is currently generating about -0.07 per unit of risk. If you would invest 7,869 in Nabors Industries on January 27, 2024 and sell it today you would lose (245.00) from holding Nabors Industries or give up 3.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nabors Industries vs. GlaxoSmithKline PLC ADR
Performance |
Timeline |
Nabors Industries |
GlaxoSmithKline PLC ADR |
Nabors Industries and GlaxoSmithKline PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nabors Industries and GlaxoSmithKline PLC
The main advantage of trading using opposite Nabors Industries and GlaxoSmithKline PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, GlaxoSmithKline PLC 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 GlaxoSmithKline PLC will offset losses from the drop in GlaxoSmithKline PLC's long position.Nabors Industries vs. Borr Drilling | Nabors Industries vs. Noble plc | Nabors Industries vs. Transocean | Nabors Industries vs. Independence Contract Drilling |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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