Correlation Between Northern Ocean and Dolphin Drilling
Can any of the company-specific risk be diversified away by investing in both Northern Ocean and Dolphin 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 Northern Ocean and Dolphin Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Ocean and Dolphin Drilling AS, you can compare the effects of market volatilities on Northern Ocean and Dolphin 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 Northern Ocean with a short position of Dolphin Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Ocean and Dolphin Drilling.
Diversification Opportunities for Northern Ocean and Dolphin Drilling
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Dolphin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Northern Ocean and Dolphin Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Drilling and Northern Ocean 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 Northern Ocean are associated (or correlated) with Dolphin Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Drilling has no effect on the direction of Northern Ocean i.e., Northern Ocean and Dolphin Drilling go up and down completely randomly.
Pair Corralation between Northern Ocean and Dolphin Drilling
Assuming the 90 days trading horizon Northern Ocean is expected to generate 0.53 times more return on investment than Dolphin Drilling. However, Northern Ocean is 1.88 times less risky than Dolphin Drilling. It trades about 0.05 of its potential returns per unit of risk. Dolphin Drilling AS is currently generating about 0.0 per unit of risk. If you would invest 765.00 in Northern Ocean on October 23, 2024 and sell it today you would earn a total of 10.00 from holding Northern Ocean or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Ocean vs. Dolphin Drilling AS
Performance |
| Timeline |
| Northern Ocean |
| Dolphin Drilling |
Northern Ocean and Dolphin Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Ocean and Dolphin Drilling
The main advantage of trading using opposite Northern Ocean and Dolphin Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Ocean position performs unexpectedly, Dolphin 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 Dolphin Drilling will offset losses from the drop in Dolphin Drilling's long position.| Northern Ocean vs. Odfjell Drilling | Northern Ocean vs. Shelf Drilling | Northern Ocean vs. Deep Value Driller |
| Dolphin Drilling vs. Deep Value Driller | Dolphin Drilling vs. Odfjell Drilling | Dolphin Drilling vs. NorAm Drilling AS | Dolphin Drilling vs. SD Standard 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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