Correlation Between BORR DRILLING and Bank of America
Can any of the company-specific risk be diversified away by investing in both BORR DRILLING and Bank of America 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 BORR DRILLING and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BORR DRILLING NEW and Verizon Communications, you can compare the effects of market volatilities on BORR DRILLING and Bank of America 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 BORR DRILLING with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and Bank of America.
Diversification Opportunities for BORR DRILLING and Bank of America
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BORR and Bank is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and BORR DRILLING 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 BORR DRILLING NEW are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and Bank of America go up and down completely randomly.
Pair Corralation between BORR DRILLING and Bank of America
Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Bank of America. In addition to that, BORR DRILLING is 2.98 times more volatile than Verizon Communications. It trades about -0.15 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.02 per unit of volatility. If you would invest 3,954 in Verizon Communications on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Verizon Communications or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BORR DRILLING NEW vs. Verizon Communications
Performance |
| Timeline |
| BORR DRILLING NEW |
| Verizon Communications |
BORR DRILLING and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BORR DRILLING and Bank of America
The main advantage of trading using opposite BORR DRILLING and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| BORR DRILLING vs. Nabors Industries | BORR DRILLING vs. PRECISION DRILLING P | BORR DRILLING vs. SHELF DRILLING LTD | BORR DRILLING vs. Daldrup Shne Aktiengesellschaft |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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