Correlation Between Lindblad Expeditions and Seadrill

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Can any of the company-specific risk be diversified away by investing in both Lindblad Expeditions 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 Lindblad Expeditions and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindblad Expeditions Holdings and Seadrill Limited, you can compare the effects of market volatilities on Lindblad Expeditions 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 Lindblad Expeditions with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindblad Expeditions and Seadrill.

Diversification Opportunities for Lindblad Expeditions and Seadrill

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Lindblad and Seadrill is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and Seadrill go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Seadrill

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to generate 1.8 times more return on investment than Seadrill. However, Lindblad Expeditions is 1.8 times more volatile than Seadrill Limited. It trades about 0.16 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.02 per unit of risk. If you would invest  925.00  in Lindblad Expeditions Holdings on August 29, 2024 and sell it today you would earn a total of  298.50  from holding Lindblad Expeditions Holdings or generate 32.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Lindblad Expeditions Holdings  vs.  Seadrill Limited

 Performance 
       Timeline  
Lindblad Expeditions 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.
Seadrill Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Seadrill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lindblad Expeditions and Seadrill Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lindblad Expeditions and Seadrill

The main advantage of trading using opposite Lindblad Expeditions and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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