Correlation Between BORR DRILLING and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both BORR DRILLING and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on BORR DRILLING and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and FLOW TRADERS.
Diversification Opportunities for BORR DRILLING and FLOW TRADERS
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BORR and FLOW is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and FLOW TRADERS go up and down completely randomly.
Pair Corralation between BORR DRILLING and FLOW TRADERS
Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the FLOW TRADERS. In addition to that, BORR DRILLING is 3.26 times more volatile than FLOW TRADERS LTD. It trades about -0.05 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.02 per unit of volatility. If you would invest 2,100 in FLOW TRADERS LTD on September 1, 2024 and sell it today you would earn a total of 8.00 from holding FLOW TRADERS LTD or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BORR DRILLING NEW vs. FLOW TRADERS LTD
Performance |
| Timeline |
| BORR DRILLING NEW |
| FLOW TRADERS LTD |
BORR DRILLING and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BORR DRILLING and FLOW TRADERS
The main advantage of trading using opposite BORR DRILLING and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| BORR DRILLING vs. PRECISION DRILLING P | BORR DRILLING vs. SHELF DRILLING LTD | BORR DRILLING vs. Daldrup Shne Aktiengesellschaft | BORR DRILLING vs. Superior Plus Corp |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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