Correlation Between Noble Plc and CES Energy
Can any of the company-specific risk be diversified away by investing in both Noble Plc and CES Energy 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 Noble Plc and CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and CES Energy Solutions, you can compare the effects of market volatilities on Noble Plc and CES Energy 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 Noble Plc with a short position of CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and CES Energy.
Diversification Opportunities for Noble Plc and CES Energy
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Noble and CES is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and Noble Plc 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 Noble plc are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Noble Plc i.e., Noble Plc and CES Energy go up and down completely randomly.
Pair Corralation between Noble Plc and CES Energy
Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the CES Energy. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 1.08 times less risky than CES Energy. The stock trades about -0.01 of its potential returns per unit of risk. The CES Energy Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 530.00 in CES Energy Solutions on September 12, 2024 and sell it today you would earn a total of 140.00 from holding CES Energy Solutions or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Noble plc vs. CES Energy Solutions
Performance |
| Timeline |
| Noble plc |
| CES Energy Solutions |
Noble Plc and CES Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and CES Energy
The main advantage of trading using opposite Noble Plc and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, CES Energy 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 CES Energy will offset losses from the drop in CES Energy's long position.| Noble Plc vs. Nabors Industries | Noble Plc vs. Borr Drilling | Noble Plc vs. Transocean | Noble Plc vs. Helmerich and Payne |
| CES Energy vs. Tamarack Valley Energy | CES Energy vs. Secure Energy Services | CES Energy vs. Caixabank SA ADR | CES Energy vs. High Arctic Energy |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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