Correlation Between Borr Drilling and Noble Plc
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and Noble Plc 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 Noble Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and Noble plc, you can compare the effects of market volatilities on Borr Drilling and Noble Plc 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 Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and Noble Plc.
Diversification Opportunities for Borr Drilling and Noble Plc
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Borr and Noble is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Borr Drilling i.e., Borr Drilling and Noble Plc go up and down completely randomly.
Pair Corralation between Borr Drilling and Noble Plc
Given the investment horizon of 90 days Borr Drilling is expected to under-perform the Noble Plc. In addition to that, Borr Drilling is 1.23 times more volatile than Noble plc. It trades about -0.14 of its total potential returns per unit of risk. Noble plc is currently generating about -0.08 per unit of volatility. If you would invest 4,609 in Noble plc on August 24, 2024 and sell it today you would lose (1,139) from holding Noble plc or give up 24.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borr Drilling vs. Noble plc
Performance |
| Timeline |
| Borr Drilling |
| Noble plc |
Borr Drilling and Noble Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and Noble Plc
The main advantage of trading using opposite Borr Drilling and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, Noble Plc 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 Noble Plc will offset losses from the drop in Noble Plc's long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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