Correlation Between SBM OFFSHORE and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and BORR DRILLING 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 SBM OFFSHORE and BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and BORR DRILLING NEW, you can compare the effects of market volatilities on SBM OFFSHORE and BORR DRILLING 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 SBM OFFSHORE with a short position of BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and BORR DRILLING.
Diversification Opportunities for SBM OFFSHORE and BORR DRILLING
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and BORR is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW and SBM OFFSHORE 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 SBM OFFSHORE are associated (or correlated) with BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and BORR DRILLING go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and BORR DRILLING
Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the BORR DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 2.08 times less risky than BORR DRILLING. The stock trades about -0.07 of its potential returns per unit of risk. The BORR DRILLING NEW is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 377.00 in BORR DRILLING NEW on September 14, 2024 and sell it today you would lose (12.00) from holding BORR DRILLING NEW or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. BORR DRILLING NEW
Performance |
| Timeline |
| SBM OFFSHORE |
| BORR DRILLING NEW |
SBM OFFSHORE and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and BORR DRILLING
The main advantage of trading using opposite SBM OFFSHORE and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
| BORR DRILLING vs. MAVEN WIRELESS SWEDEN | BORR DRILLING vs. Dairy Farm International | BORR DRILLING vs. CITY OFFICE REIT | BORR DRILLING vs. Tyson Foods |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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