Correlation Between Digi International and Nabors Energy

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

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

Diversification Opportunities for Digi International and Nabors Energy

0.38

Correlation Coefficient

Digi International  Nabors Energy

Weak diversification

The 3 months correlation between Digi and Nabors is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition and Digi International 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 Digi International are associated (or correlated) with Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Digi International i.e., Digi International and Nabors Energy go up and down completely randomly.

Pair Corralation between Digi International and Nabors Energy

Given the investment horizon of 90 days Digi International is expected to generate 11.76 times less return on investment than Nabors Energy. But when comparing it to its historical volatility, Digi International is 7.64 times less risky than Nabors Energy. It trades about 0.05 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Nabors Energy Transition on May 26, 2025 and sell it today you would lose (9.00) from holding Nabors Energy Transition or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Digi International  vs.  Nabors Energy Transition

Digi International

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Nabors Energy Transition

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digi International and Nabors Energy

The main advantage of trading using opposite Digi International and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Nabors Energy 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 Energy will offset losses from the drop in Nabors Energy's long position.

The idea behind Digi International and Nabors Energy Transition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.