Correlation Between Dolphin Drilling and Stolt Nielsen
Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling and Stolt Nielsen 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 Stolt Nielsen 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 Stolt Nielsen Limited, you can compare the effects of market volatilities on Dolphin Drilling and Stolt Nielsen 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 Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Stolt Nielsen.
Diversification Opportunities for Dolphin Drilling and Stolt Nielsen
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dolphin and Stolt is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited 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 Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Stolt Nielsen go up and down completely randomly.
Pair Corralation between Dolphin Drilling and Stolt Nielsen
Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Stolt Nielsen. In addition to that, Dolphin Drilling is 1.69 times more volatile than Stolt Nielsen Limited. It trades about -0.09 of its total potential returns per unit of risk. Stolt Nielsen Limited is currently generating about -0.01 per unit of volatility. If you would invest 30,375 in Stolt Nielsen Limited on September 4, 2024 and sell it today you would lose (3,325) from holding Stolt Nielsen Limited or give up 10.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolphin Drilling AS vs. Stolt Nielsen Limited
Performance |
| Timeline |
| Dolphin Drilling |
| Stolt Nielsen Limited |
Dolphin Drilling and Stolt Nielsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolphin Drilling and Stolt Nielsen
The main advantage of trading using opposite Dolphin Drilling and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.| Dolphin Drilling vs. BW Offshore | Dolphin Drilling vs. Subsea 7 SA | Dolphin Drilling vs. Elkem ASA | Dolphin Drilling vs. Integrated Wind Solutions |
| Stolt Nielsen vs. Sparebank 1 SMN | Stolt Nielsen vs. BW Offshore | Stolt Nielsen vs. Norwegian Air Shuttle | Stolt Nielsen vs. Jaeren Sparebank |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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