Correlation Between Borr Drilling and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and CGX Energy 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 CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and CGX Energy, you can compare the effects of market volatilities on Borr Drilling and CGX Energy 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and CGX Energy.
Diversification Opportunities for Borr Drilling and CGX Energy
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Borr and CGX is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Borr Drilling i.e., Borr Drilling and CGX Energy go up and down completely randomly.
Pair Corralation between Borr Drilling and CGX Energy
Given the investment horizon of 90 days Borr Drilling is expected to generate 0.55 times more return on investment than CGX Energy. However, Borr Drilling is 1.83 times less risky than CGX Energy. It trades about 0.01 of its potential returns per unit of risk. CGX Energy is currently generating about -0.03 per unit of risk. If you would invest 429.00 in Borr Drilling on September 4, 2024 and sell it today you would lose (54.00) from holding Borr Drilling or give up 12.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borr Drilling vs. CGX Energy
Performance |
| Timeline |
| Borr Drilling |
| CGX Energy |
Borr Drilling and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and CGX Energy
The main advantage of trading using opposite Borr Drilling and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, CGX Energy 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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