Correlation Between BORR DRILLING and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both BORR DRILLING and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on BORR DRILLING and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and Sterling Construction.
Diversification Opportunities for BORR DRILLING and Sterling Construction
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BORR and Sterling is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and Sterling Construction go up and down completely randomly.
Pair Corralation between BORR DRILLING and Sterling Construction
Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Sterling Construction. But the stock apears to be less risky and, when comparing its historical volatility, BORR DRILLING NEW is 1.11 times less risky than Sterling Construction. The stock trades about -0.02 of its potential returns per unit of risk. The Sterling Construction is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,350 in Sterling Construction on August 28, 2024 and sell it today you would earn a total of 13,405 from holding Sterling Construction or generate 250.56% 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. Sterling Construction
Performance |
| Timeline |
| BORR DRILLING NEW |
| Sterling Construction |
BORR DRILLING and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BORR DRILLING and Sterling Construction
The main advantage of trading using opposite BORR DRILLING and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.The idea behind BORR DRILLING NEW and Sterling Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sterling Construction vs. Seven West Media | Sterling Construction vs. ZINC MEDIA GR | Sterling Construction vs. AWILCO DRILLING PLC | Sterling Construction vs. ATRESMEDIA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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