Correlation Between Major Drilling and Noble Plc
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Noble Plc 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 Major Drilling and Noble Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Noble plc, you can compare the effects of market volatilities on Major Drilling and Noble Plc 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 Major Drilling with a short position of Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Noble Plc.
Diversification Opportunities for Major Drilling and Noble Plc
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and Noble is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc and Major Drilling 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 Major Drilling Group are associated (or correlated) with Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Major Drilling i.e., Major Drilling and Noble Plc go up and down completely randomly.
Pair Corralation between Major Drilling and Noble Plc
Assuming the 90 days horizon Major Drilling Group is expected to generate 1.42 times more return on investment than Noble Plc. However, Major Drilling is 1.42 times more volatile than Noble plc. It trades about 0.06 of its potential returns per unit of risk. Noble plc is currently generating about -0.07 per unit of risk. If you would invest 584.00 in Major Drilling Group on November 9, 2024 and sell it today you would earn a total of 14.00 from holding Major Drilling Group or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Noble plc
Performance |
| Timeline |
| Major Drilling Group |
| Noble plc |
Major Drilling and Noble Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Noble Plc
The main advantage of trading using opposite Major Drilling and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Noble Plc 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 Noble Plc will offset losses from the drop in Noble Plc's long position.| Major Drilling vs. Geodrill Limited | Major Drilling vs. Prime Meridian Resources | Major Drilling vs. Macmahon Holdings Limited | Major Drilling vs. Hudson Resources |
| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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