Correlation Between RCL Foods and Nabors Energy

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

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

Diversification Opportunities for RCL Foods and Nabors Energy

0.55

Correlation Coefficient

RCL Foods  Nabors Energy

Very weak diversification

The 3 months correlation between RCL and Nabors is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods Limited 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 RCL Foods 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 RCL Foods Limited 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 RCL Foods i.e., RCL Foods and Nabors Energy go up and down completely randomly.

Pair Corralation between RCL Foods and Nabors Energy

Assuming the 90 days horizon RCL Foods Limited is expected to generate 9.07 times more return on investment than Nabors Energy. However, RCL Foods is 9.07 times more volatile than Nabors Energy Transition. It trades about 0.11 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.1 per unit of risk. If you would invest  47.00  in RCL Foods Limited on May 13, 2025 and sell it today you would earn a total of  10.00  from holding RCL Foods Limited or generate 21.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

RCL Foods Limited  vs.  Nabors Energy Transition

RCL Foods Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, RCL Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Nabors Energy Transition

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nabors Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RCL Foods and Nabors Energy

The main advantage of trading using opposite RCL Foods and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCL Foods 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 RCL Foods Limited 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.