Correlation Between Noble Plc and High Arctic
Can any of the company-specific risk be diversified away by investing in both Noble Plc and High Arctic 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 High Arctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and High Arctic Energy, you can compare the effects of market volatilities on Noble Plc and High Arctic 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 High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and High Arctic.
Diversification Opportunities for Noble Plc and High Arctic
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Noble and High is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy 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 High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of Noble Plc i.e., Noble Plc and High Arctic go up and down completely randomly.
Pair Corralation between Noble Plc and High Arctic
Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the High Arctic. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 13.68 times less risky than High Arctic. The stock trades about -0.03 of its potential returns per unit of risk. The High Arctic Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 234.00 in High Arctic Energy on September 4, 2024 and sell it today you would lose (153.00) from holding High Arctic Energy or give up 65.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.62% |
| Values | Daily Returns |
Noble plc vs. High Arctic Energy
Performance |
| Timeline |
| Noble plc |
| High Arctic Energy |
Noble Plc and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and High Arctic
The main advantage of trading using opposite Noble Plc and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, High Arctic 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 High Arctic will offset losses from the drop in High Arctic's long position.| Noble Plc vs. Precision Drilling | Noble Plc vs. Sable Offshore Corp | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Seadrill Limited |
| High Arctic vs. Seadrill Limited | High Arctic vs. Noble plc | High Arctic vs. Borr Drilling | High Arctic vs. SCOR PK |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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