Correlation Between Borr Drilling and Diamond Offshore
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and Diamond Offshore 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 Diamond Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and Diamond Offshore Drilling, you can compare the effects of market volatilities on Borr Drilling and Diamond Offshore 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 Diamond Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and Diamond Offshore.
Diversification Opportunities for Borr Drilling and Diamond Offshore
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Borr and Diamond is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Diamond Offshore Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Offshore Drilling 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 Diamond Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Offshore Drilling has no effect on the direction of Borr Drilling i.e., Borr Drilling and Diamond Offshore go up and down completely randomly.
Pair Corralation between Borr Drilling and Diamond Offshore
Given the investment horizon of 90 days Borr Drilling is expected to generate 0.25 times more return on investment than Diamond Offshore. However, Borr Drilling is 3.99 times less risky than Diamond Offshore. It trades about -0.14 of its potential returns per unit of risk. Diamond Offshore Drilling is currently generating about -0.12 per unit of risk. If you would invest 703.00 in Borr Drilling on August 24, 2024 and sell it today you would lose (308.00) from holding Borr Drilling or give up 43.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 56.0% |
| Values | Daily Returns |
Borr Drilling vs. Diamond Offshore Drilling
Performance |
| Timeline |
| Borr Drilling |
| Diamond Offshore Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Borr Drilling and Diamond Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and Diamond Offshore
The main advantage of trading using opposite Borr Drilling and Diamond Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, Diamond Offshore 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 Diamond Offshore will offset losses from the drop in Diamond Offshore's long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
| Diamond Offshore vs. Seadrill Limited | Diamond Offshore vs. Nabors Industries | Diamond Offshore vs. Borr Drilling | Diamond Offshore vs. Patterson UTI Energy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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