Correlation Between American Funds and Borr Drilling
Can any of the company-specific risk be diversified away by investing in both American Funds and Borr Drilling 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 American Funds and Borr Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Borr Drilling, you can compare the effects of market volatilities on American Funds and Borr Drilling 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 American Funds with a short position of Borr Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Borr Drilling.
Diversification Opportunities for American Funds and Borr Drilling
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Borr is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and American Funds 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 American Funds Fundamental are associated (or correlated) with Borr Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borr Drilling has no effect on the direction of American Funds i.e., American Funds and Borr Drilling go up and down completely randomly.
Pair Corralation between American Funds and Borr Drilling
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.42 times more return on investment than Borr Drilling. However, American Funds Fundamental is 2.38 times less risky than Borr Drilling. It trades about 0.2 of its potential returns per unit of risk. Borr Drilling is currently generating about -0.37 per unit of risk. If you would invest 8,194 in American Funds Fundamental on October 24, 2024 and sell it today you would earn a total of 259.00 from holding American Funds Fundamental or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 27.78% |
| Values | Daily Returns |
American Funds Fundamental vs. Borr Drilling
Performance |
| Timeline |
| American Funds Funda |
| Borr Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Funds and Borr Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Borr Drilling
The main advantage of trading using opposite American Funds and Borr Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Borr Drilling 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 Borr Drilling will offset losses from the drop in Borr Drilling's long position.| American Funds vs. Virtus High Yield | American Funds vs. Ab High Income | American Funds vs. Multi Manager High Yield | American Funds vs. Ab High Income |
| Borr Drilling vs. Shelf Drilling | Borr Drilling vs. Odfjell Drilling | Borr Drilling vs. Frontline | Borr Drilling vs. Aker BP ASA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |