Correlation Between Nabors Industries and Owens Corning

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Can any of the company-specific risk be diversified away by investing in both Nabors Industries and Owens Corning 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 Owens Corning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nabors Industries and Owens Corning, you can compare the effects of market volatilities on Nabors Industries and Owens Corning 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 Owens Corning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Industries and Owens Corning.

Diversification Opportunities for Nabors Industries and Owens Corning

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nabors and Owens is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning 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 Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Nabors Industries i.e., Nabors Industries and Owens Corning go up and down completely randomly.

Pair Corralation between Nabors Industries and Owens Corning

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Owens Corning. In addition to that, Nabors Industries is 1.86 times more volatile than Owens Corning. It trades about -0.09 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.09 per unit of volatility. If you would invest  8,083  in Owens Corning on July 6, 2022 and sell it today you would earn a total of  401.00  from holding Owens Corning or generate 4.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nabors Industries  vs.  Owens Corning

 Performance (%) 
       Timeline  
Nabors Industries 
Nabors Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, Nabors Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Nabors Price Channel

Owens Corning 
Owens Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Owens Corning are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Owens Corning may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Owens Price Channel

Nabors Industries and Owens Corning Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nabors Industries and Owens Corning

The main advantage of trading using opposite Nabors Industries and Owens Corning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries position performs unexpectedly, Owens Corning 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 Owens Corning will offset losses from the drop in Owens Corning's long position.
Nabors Industries vs. Amazon Inc
The idea behind Nabors Industries and Owens Corning 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.
Owens Corning vs. Amazon Inc
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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