Correlation Between Dolphin Drilling and Northern Ocean
Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling and Northern Ocean 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 Northern Ocean 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 Northern Ocean, you can compare the effects of market volatilities on Dolphin Drilling and Northern Ocean 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 Northern Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Northern Ocean.
Diversification Opportunities for Dolphin Drilling and Northern Ocean
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dolphin and Northern is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Northern Ocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Ocean 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 Northern Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Ocean has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Northern Ocean go up and down completely randomly.
Pair Corralation between Dolphin Drilling and Northern Ocean
Assuming the 90 days trading horizon Dolphin Drilling AS is expected to generate 1.61 times more return on investment than Northern Ocean. However, Dolphin Drilling is 1.61 times more volatile than Northern Ocean. It trades about 0.0 of its potential returns per unit of risk. Northern Ocean is currently generating about -0.06 per unit of risk. If you would invest 378.00 in Dolphin Drilling AS on November 3, 2024 and sell it today you would lose (2.00) from holding Dolphin Drilling AS or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolphin Drilling AS vs. Northern Ocean
Performance |
| Timeline |
| Dolphin Drilling |
| Northern Ocean |
Dolphin Drilling and Northern Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolphin Drilling and Northern Ocean
The main advantage of trading using opposite Dolphin Drilling and Northern Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling position performs unexpectedly, Northern Ocean 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 Northern Ocean will offset losses from the drop in Northern Ocean's long position.| Dolphin Drilling vs. Deep Value Driller | Dolphin Drilling vs. Odfjell Drilling | Dolphin Drilling vs. NorAm Drilling AS | Dolphin Drilling vs. SD Standard Drilling |
| Northern Ocean vs. Odfjell Drilling | Northern Ocean vs. Shelf Drilling | Northern Ocean vs. Deep Value Driller |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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