Correlation Between CATLIN GROUP and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Odfjell Drilling 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 CATLIN GROUP and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Odfjell Drilling, you can compare the effects of market volatilities on CATLIN GROUP and Odfjell Drilling 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 CATLIN GROUP with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Odfjell Drilling.
Diversification Opportunities for CATLIN GROUP and Odfjell Drilling
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CATLIN and Odfjell is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Odfjell Drilling go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Odfjell Drilling
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 3.03 times less return on investment than Odfjell Drilling. But when comparing it to its historical volatility, CATLIN GROUP is 1.26 times less risky than Odfjell Drilling. It trades about 0.05 of its potential returns per unit of risk. Odfjell Drilling is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Odfjell Drilling on September 4, 2024 and sell it today you would earn a total of 2,585 from holding Odfjell Drilling or generate 108.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
CATLIN GROUP vs. Odfjell Drilling
Performance |
| Timeline |
| CATLIN GROUP |
| Odfjell Drilling |
CATLIN GROUP and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Odfjell Drilling
The main advantage of trading using opposite CATLIN GROUP and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| CATLIN GROUP vs. Tungsten West PLC | CATLIN GROUP vs. Versarien PLC | CATLIN GROUP vs. Quantum Blockchain Technologies | CATLIN GROUP vs. Malvern International |
| Odfjell Drilling vs. Samsung Electronics Co | Odfjell Drilling vs. Samsung Electronics Co | Odfjell Drilling vs. Hyundai Motor | Odfjell Drilling vs. Toyota Motor Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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