Correlation Between Noble Plc and Rackspace Technology
Can any of the company-specific risk be diversified away by investing in both Noble Plc and Rackspace Technology 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 Rackspace Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and Rackspace Technology, you can compare the effects of market volatilities on Noble Plc and Rackspace Technology 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 Rackspace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Rackspace Technology.
Diversification Opportunities for Noble Plc and Rackspace Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Noble and Rackspace is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology 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 Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of Noble Plc i.e., Noble Plc and Rackspace Technology go up and down completely randomly.
Pair Corralation between Noble Plc and Rackspace Technology
Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Rackspace Technology. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 1.86 times less risky than Rackspace Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Rackspace Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Rackspace Technology on August 25, 2024 and sell it today you would earn a total of 69.00 from holding Rackspace Technology or generate 36.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Noble plc vs. Rackspace Technology
Performance |
| Timeline |
| Noble plc |
| Rackspace Technology |
Noble Plc and Rackspace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and Rackspace Technology
The main advantage of trading using opposite Noble Plc and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, Rackspace Technology 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 Rackspace Technology will offset losses from the drop in Rackspace Technology's long position.| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
| Rackspace Technology vs. GigaCloud Technology Class | Rackspace Technology vs. Alarum Technologies | Rackspace Technology vs. Stem Inc | Rackspace Technology vs. Pagaya Technologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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