Correlation Between Archer and Borr Drilling
Can any of the company-specific risk be diversified away by investing in both Archer 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 Archer and Borr Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Limited and Borr Drilling, you can compare the effects of market volatilities on Archer 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 Archer with a short position of Borr Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer and Borr Drilling.
Diversification Opportunities for Archer and Borr Drilling
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Archer and Borr is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Archer Limited and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and Archer 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 Archer Limited 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 Archer i.e., Archer and Borr Drilling go up and down completely randomly.
Pair Corralation between Archer and Borr Drilling
Assuming the 90 days horizon Archer Limited is expected to generate 0.32 times more return on investment than Borr Drilling. However, Archer Limited is 3.12 times less risky than Borr Drilling. It trades about -0.31 of its potential returns per unit of risk. Borr Drilling is currently generating about -0.21 per unit of risk. If you would invest 220.00 in Archer Limited on August 24, 2024 and sell it today you would lose (16.00) from holding Archer Limited or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Limited vs. Borr Drilling
Performance |
| Timeline |
| Archer Limited |
| Borr Drilling |
Archer and Borr Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer and Borr Drilling
The main advantage of trading using opposite Archer and Borr Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer 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.| Archer vs. PHX Energy Services | Archer vs. Cathedral Energy Services | Archer vs. AKITA Drilling | Archer vs. Noble plc |
| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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