Correlation Between Borr Drilling and Seadrill
Can any of the company-specific risk be diversified away by investing in both Borr Drilling and Seadrill 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 Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borr Drilling and Seadrill Limited, you can compare the effects of market volatilities on Borr Drilling and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borr Drilling and Seadrill.
Diversification Opportunities for Borr Drilling and Seadrill
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Borr and Seadrill is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Borr Drilling i.e., Borr Drilling and Seadrill go up and down completely randomly.
Pair Corralation between Borr Drilling and Seadrill
Given the investment horizon of 90 days Borr Drilling is expected to under-perform the Seadrill. In addition to that, Borr Drilling is 1.37 times more volatile than Seadrill Limited. It trades about -0.14 of its total potential returns per unit of risk. Seadrill Limited is currently generating about -0.04 per unit of volatility. If you would invest 4,075 in Seadrill Limited on November 2, 2024 and sell it today you would lose (427.00) from holding Seadrill Limited or give up 10.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borr Drilling vs. Seadrill Limited
Performance |
| Timeline |
| Borr Drilling |
| Seadrill Limited |
Borr Drilling and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borr Drilling and Seadrill
The main advantage of trading using opposite Borr Drilling and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Borr Drilling vs. Noble plc | Borr Drilling vs. Patterson UTI Energy | Borr Drilling vs. Nabors Industries | Borr Drilling vs. Seadrill Limited |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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