Correlation Between Global Ship and NOV
Can any of the company-specific risk be diversified away by investing in both Global Ship and NOV 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 Global Ship and NOV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and NOV Inc, you can compare the effects of market volatilities on Global Ship and NOV 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 Global Ship with a short position of NOV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and NOV.
Diversification Opportunities for Global Ship and NOV
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and NOV is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc and Global Ship 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 Global Ship Lease are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Global Ship i.e., Global Ship and NOV go up and down completely randomly.
Pair Corralation between Global Ship and NOV
Assuming the 90 days horizon Global Ship is expected to generate 1.02 times less return on investment than NOV. But when comparing it to its historical volatility, Global Ship Lease is 2.87 times less risky than NOV. It trades about 0.18 of its potential returns per unit of risk. NOV Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,365 in NOV Inc on December 1, 2024 and sell it today you would earn a total of 50.00 from holding NOV Inc or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. NOV Inc
Performance |
| Timeline |
| Global Ship Lease |
| NOV Inc |
Global Ship and NOV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and NOV
The main advantage of trading using opposite Global Ship and NOV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, NOV 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 NOV will offset losses from the drop in NOV's long position.| Global Ship vs. Nomad Foods | Global Ship vs. PLANT VEDA FOODS | Global Ship vs. United Overseas Insurance | Global Ship vs. UNIQA INSURANCE GR |
| NOV vs. CanSino Biologics | NOV vs. Tower Semiconductor | NOV vs. GUILD ESPORTS PLC | NOV vs. Magnachip Semiconductor |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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