Correlation Between Noble Plc and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both Noble Plc and Shelf 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 Shelf 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 Shelf Drilling, you can compare the effects of market volatilities on Noble Plc and Shelf 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 Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Shelf Drilling.
Diversification Opportunities for Noble Plc and Shelf Drilling
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Noble and Shelf is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling 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 Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of Noble Plc i.e., Noble Plc and Shelf Drilling go up and down completely randomly.
Pair Corralation between Noble Plc and Shelf Drilling
Allowing for the 90-day total investment horizon Noble plc is expected to generate 0.53 times more return on investment than Shelf Drilling. However, Noble plc is 1.89 times less risky than Shelf Drilling. It trades about -0.07 of its potential returns per unit of risk. Shelf Drilling is currently generating about -0.11 per unit of risk. If you would invest 4,496 in Noble plc on September 3, 2024 and sell it today you would lose (1,149) from holding Noble plc or give up 25.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noble plc vs. Shelf Drilling
Performance |
| Timeline |
| Noble plc |
| Shelf Drilling |
Noble Plc and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and Shelf Drilling
The main advantage of trading using opposite Noble Plc and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, Shelf 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
| Shelf Drilling vs. Noble plc | Shelf Drilling vs. Sinopec Oilfield Service | Shelf Drilling vs. Transocean | Shelf Drilling vs. Helmerich and Payne |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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