Correlation Between Eastern and Noble Plc
Can any of the company-specific risk be diversified away by investing in both Eastern and Noble Plc 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 Eastern and Noble Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Noble plc, you can compare the effects of market volatilities on Eastern and Noble Plc 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 Eastern with a short position of Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Noble Plc.
Diversification Opportunities for Eastern and Noble Plc
Good diversification
The 3 months correlation between Eastern and Noble is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc and Eastern 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 Eastern Co are associated (or correlated) with Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Eastern i.e., Eastern and Noble Plc go up and down completely randomly.
Pair Corralation between Eastern and Noble Plc
Considering the 90-day investment horizon Eastern Co is expected to under-perform the Noble Plc. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 1.16 times less risky than Noble Plc. The stock trades about -0.16 of its potential returns per unit of risk. The Noble plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,122 in Noble plc on August 30, 2024 and sell it today you would earn a total of 221.00 from holding Noble plc or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Noble plc
Performance |
| Timeline |
| Eastern |
| Noble plc |
Eastern and Noble Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Noble Plc
The main advantage of trading using opposite Eastern and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, Noble Plc 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 Noble Plc will offset losses from the drop in Noble Plc's long position.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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