Correlation Between Noble Plc and Sable Offshore
Can any of the company-specific risk be diversified away by investing in both Noble Plc and Sable Offshore 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 Sable Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble plc and Sable Offshore Corp, you can compare the effects of market volatilities on Noble Plc and Sable Offshore 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 Sable Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Sable Offshore.
Diversification Opportunities for Noble Plc and Sable Offshore
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Noble and Sable is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Noble Plc i.e., Noble Plc and Sable Offshore go up and down completely randomly.
Pair Corralation between Noble Plc and Sable Offshore
Allowing for the 90-day total investment horizon Noble Plc is expected to generate 1.74 times less return on investment than Sable Offshore. But when comparing it to its historical volatility, Noble plc is 1.14 times less risky than Sable Offshore. It trades about 0.12 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,140 in Sable Offshore Corp on August 27, 2024 and sell it today you would earn a total of 291.00 from holding Sable Offshore Corp or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noble plc vs. Sable Offshore Corp
Performance |
| Timeline |
| Noble plc |
| Sable Offshore Corp |
Noble Plc and Sable Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Plc and Sable Offshore
The main advantage of trading using opposite Noble Plc and Sable Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc position performs unexpectedly, Sable Offshore 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 Sable Offshore will offset losses from the drop in Sable Offshore's long position.| Noble Plc vs. Nabors Industries | Noble Plc vs. Precision Drilling | Noble Plc vs. Seadrill Limited | Noble Plc vs. Patterson UTI Energy |
| Sable Offshore vs. Helmerich and Payne | Sable Offshore vs. Noble plc | Sable Offshore vs. Nabors Industries | Sable Offshore vs. Precision Drilling |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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