Correlation Between Freedom Holding and Seadrill
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Seadrill 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 Freedom Holding and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Seadrill Limited, you can compare the effects of market volatilities on Freedom Holding and Seadrill 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 Freedom Holding with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Seadrill.
Diversification Opportunities for Freedom Holding and Seadrill
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Seadrill is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Freedom Holding 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 Freedom Holding Corp are associated (or correlated) with Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Freedom Holding i.e., Freedom Holding and Seadrill go up and down completely randomly.
Pair Corralation between Freedom Holding and Seadrill
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.99 times more return on investment than Seadrill. However, Freedom Holding Corp is 1.01 times less risky than Seadrill. It trades about 0.31 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.18 per unit of risk. If you would invest 11,622 in Freedom Holding Corp on September 19, 2024 and sell it today you would earn a total of 1,496 from holding Freedom Holding Corp or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Seadrill Limited
Performance |
| Timeline |
| Freedom Holding Corp |
| Seadrill Limited |
Freedom Holding and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Seadrill
The main advantage of trading using opposite Freedom Holding and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Freedom Holding vs. Scully Royalty | Freedom Holding vs. Mercurity Fintech Holding | Freedom Holding vs. Donnelley Financial Solutions | Freedom Holding vs. CreditRiskMonitorCom |
| Seadrill vs. Helmerich and Payne | Seadrill vs. Sable Offshore Corp | Seadrill vs. Borr Drilling | Seadrill vs. Valaris |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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