Correlation Between Borr Drilling and Altex Industries
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and Altex Industries 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 Altex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and Altex Industries, you can compare the effects of market volatilities on Borr Drilling and Altex Industries 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 Altex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and Altex Industries.
Diversification Opportunities for Borr Drilling and Altex Industries
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Borr and Altex is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Altex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altex Industries 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 are associated (or correlated) with Altex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altex Industries has no effect on the direction of Borr Drilling i.e., Borr Drilling and Altex Industries go up and down completely randomly.
Pair Corralation between Borr Drilling and Altex Industries
Given the investment horizon of 90 days Borr Drilling is expected to generate 23.53 times less return on investment than Altex Industries. But when comparing it to its historical volatility, Borr Drilling is 2.14 times less risky than Altex Industries. It trades about 0.01 of its potential returns per unit of risk. Altex Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.20 in Altex Industries on September 5, 2024 and sell it today you would earn a total of 15.80 from holding Altex Industries or generate 192.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Borr Drilling vs. Altex Industries
Performance |
| Timeline |
| Borr Drilling |
| Altex Industries |
Borr Drilling and Altex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and Altex Industries
The main advantage of trading using opposite Borr Drilling and Altex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, Altex Industries 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 Altex Industries will offset losses from the drop in Altex Industries' long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
| Altex Industries vs. Seadrill Limited | Altex Industries vs. Noble plc | Altex Industries vs. Borr Drilling | Altex Industries vs. SCOR PK |
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.
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