Correlation Between Borr Drilling and GulfSlope Energy
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and GulfSlope 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 GulfSlope 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 GulfSlope Energy, you can compare the effects of market volatilities on Borr Drilling and GulfSlope 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 GulfSlope Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and GulfSlope Energy.
Diversification Opportunities for Borr Drilling and GulfSlope Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Borr and GulfSlope is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and GulfSlope Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GulfSlope 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 GulfSlope Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GulfSlope Energy has no effect on the direction of Borr Drilling i.e., Borr Drilling and GulfSlope Energy go up and down completely randomly.
Pair Corralation between Borr Drilling and GulfSlope Energy
Given the investment horizon of 90 days Borr Drilling is expected to under-perform the GulfSlope Energy. But the stock apears to be less risky and, when comparing its historical volatility, Borr Drilling is 20.6 times less risky than GulfSlope Energy. The stock trades about -0.04 of its potential returns per unit of risk. The GulfSlope Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.10 in GulfSlope Energy on September 3, 2024 and sell it today you would lose (0.09) from holding GulfSlope Energy or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borr Drilling vs. GulfSlope Energy
Performance |
| Timeline |
| Borr Drilling |
| GulfSlope Energy |
Borr Drilling and GulfSlope Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and GulfSlope Energy
The main advantage of trading using opposite Borr Drilling and GulfSlope Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, GulfSlope 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 GulfSlope Energy will offset losses from the drop in GulfSlope 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 |
| GulfSlope Energy vs. Seadrill Limited | GulfSlope Energy vs. Noble plc | GulfSlope Energy vs. Borr Drilling | GulfSlope Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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