Correlation Between Borr Drilling and SPACE
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and SPACE 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 SPACE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and SPACE, you can compare the effects of market volatilities on Borr Drilling and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and SPACE.
Diversification Opportunities for Borr Drilling and SPACE
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Borr and SPACE is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Borr Drilling i.e., Borr Drilling and SPACE go up and down completely randomly.
Pair Corralation between Borr Drilling and SPACE
Given the investment horizon of 90 days Borr Drilling is expected to under-perform the SPACE. But the stock apears to be less risky and, when comparing its historical volatility, Borr Drilling is 1.34 times less risky than SPACE. The stock trades about -0.13 of its potential returns per unit of risk. The SPACE is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 36.00 in SPACE on September 4, 2024 and sell it today you would earn a total of 23.00 from holding SPACE or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Borr Drilling vs. SPACE
Performance |
| Timeline |
| Borr Drilling |
| SPACE |
Borr Drilling and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and SPACE
The main advantage of trading using opposite Borr Drilling and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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