Correlation Between HNI Corp and Seadrill
Can any of the company-specific risk be diversified away by investing in both HNI Corp 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 HNI Corp and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Seadrill Limited, you can compare the effects of market volatilities on HNI Corp 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 HNI Corp with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Seadrill.
Diversification Opportunities for HNI Corp and Seadrill
Weak diversification
The 3 months correlation between HNI and Seadrill is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and HNI Corp 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 HNI 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 HNI Corp i.e., HNI Corp and Seadrill go up and down completely randomly.
Pair Corralation between HNI Corp and Seadrill
Considering the 90-day investment horizon HNI Corp is expected to generate 0.73 times more return on investment than Seadrill. However, HNI Corp is 1.37 times less risky than Seadrill. It trades about 0.1 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.01 per unit of risk. If you would invest 3,949 in HNI Corp on September 2, 2024 and sell it today you would earn a total of 1,716 from holding HNI Corp or generate 43.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNI Corp vs. Seadrill Limited
Performance |
| Timeline |
| HNI Corp |
| Seadrill Limited |
HNI Corp and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and Seadrill
The main advantage of trading using opposite HNI Corp and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp 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.The idea behind HNI Corp and Seadrill Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |