Correlation Between Dolphin Drilling and Sparebank
Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling and Sparebank 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 Dolphin Drilling and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolphin Drilling AS and Sparebank 1 SMN, you can compare the effects of market volatilities on Dolphin Drilling and Sparebank 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 Dolphin Drilling with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Sparebank.
Diversification Opportunities for Dolphin Drilling and Sparebank
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dolphin and Sparebank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Sparebank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SMN and Dolphin 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 Dolphin Drilling AS are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SMN has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Sparebank go up and down completely randomly.
Pair Corralation between Dolphin Drilling and Sparebank
Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Sparebank. In addition to that, Dolphin Drilling is 3.1 times more volatile than Sparebank 1 SMN. It trades about -0.13 of its total potential returns per unit of risk. Sparebank 1 SMN is currently generating about -0.03 per unit of volatility. If you would invest 16,500 in Sparebank 1 SMN on August 29, 2024 and sell it today you would lose (130.00) from holding Sparebank 1 SMN or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolphin Drilling AS vs. Sparebank 1 SMN
Performance |
| Timeline |
| Dolphin Drilling |
| Sparebank 1 SMN |
Dolphin Drilling and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolphin Drilling and Sparebank
The main advantage of trading using opposite Dolphin Drilling and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Dolphin Drilling vs. BW Offshore | Dolphin Drilling vs. Elkem ASA | Dolphin Drilling vs. Solstad Offsho | Dolphin Drilling vs. Arcticzymes Technologies ASA |
| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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