Correlation Between Gear Energy and Seadrill
Can any of the company-specific risk be diversified away by investing in both Gear Energy 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 Gear Energy and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and Seadrill Limited, you can compare the effects of market volatilities on Gear Energy 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 Gear Energy with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Seadrill.
Diversification Opportunities for Gear Energy and Seadrill
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gear and Seadrill is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Gear Energy 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 Gear Energy 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 Gear Energy i.e., Gear Energy and Seadrill go up and down completely randomly.
Pair Corralation between Gear Energy and Seadrill
Assuming the 90 days horizon Gear Energy is expected to under-perform the Seadrill. In addition to that, Gear Energy is 1.08 times more volatile than Seadrill Limited. It trades about -0.09 of its total potential returns per unit of risk. Seadrill Limited is currently generating about 0.01 per unit of volatility. If you would invest 3,994 in Seadrill Limited on September 12, 2024 and sell it today you would earn a total of 3.50 from holding Seadrill Limited or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Seadrill Limited
Performance |
| Timeline |
| Gear Energy |
| Seadrill Limited |
Gear Energy and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Seadrill
The main advantage of trading using opposite Gear Energy and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy 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.| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Transocean | Seadrill vs. Helmerich and Payne |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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