Correlation Between Borr Drilling and PHX Energy
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and PHX 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 PHX 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 PHX Energy Services, you can compare the effects of market volatilities on Borr Drilling and PHX 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 PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and PHX Energy.
Diversification Opportunities for Borr Drilling and PHX Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Borr and PHX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services 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 PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Borr Drilling i.e., Borr Drilling and PHX Energy go up and down completely randomly.
Pair Corralation between Borr Drilling and PHX Energy
Given the investment horizon of 90 days Borr Drilling is expected to under-perform the PHX Energy. In addition to that, Borr Drilling is 1.21 times more volatile than PHX Energy Services. It trades about -0.13 of its total potential returns per unit of risk. PHX Energy Services is currently generating about 0.07 per unit of volatility. If you would invest 678.00 in PHX Energy Services on September 4, 2024 and sell it today you would earn a total of 22.00 from holding PHX Energy Services or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Borr Drilling vs. PHX Energy Services
Performance |
| Timeline |
| Borr Drilling |
| PHX Energy Services |
Borr Drilling and PHX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and PHX Energy
The main advantage of trading using opposite Borr Drilling and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, PHX 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 PHX Energy will offset losses from the drop in PHX 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 |
| PHX Energy vs. Seadrill Limited | PHX Energy vs. Noble plc | PHX Energy vs. Borr Drilling | PHX 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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