Correlation Between Noble Plc and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Noble Plc and Major 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 Noble Plc and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and Major Drilling Group, you can compare the effects of market volatilities on Noble Plc and Major 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 Noble Plc with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Major Drilling.
Diversification Opportunities for Noble Plc and Major Drilling
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Noble and Major is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Noble Plc i.e., Noble Plc and Major Drilling go up and down completely randomly.
Pair Corralation between Noble Plc and Major Drilling
Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Major Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 1.42 times less risky than Major Drilling. The stock trades about -0.07 of its potential returns per unit of risk. The Major Drilling Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
Noble plc vs. Major Drilling Group
Performance |
| Timeline |
| Noble plc |
| Major Drilling Group |
Noble Plc and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and Major Drilling
The main advantage of trading using opposite Noble Plc and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, Major 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
| Major Drilling vs. Geodrill Limited | Major Drilling vs. Prime Meridian Resources | Major Drilling vs. Macmahon Holdings Limited | Major Drilling vs. Hudson Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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