Correlation Between Precision Drilling and Unum
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Unum 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 Precision Drilling and Unum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Unum Group, you can compare the effects of market volatilities on Precision Drilling and Unum 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 Precision Drilling with a short position of Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Unum.
Diversification Opportunities for Precision Drilling and Unum
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Precision and Unum is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group and Precision Drilling 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 Precision Drilling are associated (or correlated) with Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Precision Drilling i.e., Precision Drilling and Unum go up and down completely randomly.
Pair Corralation between Precision Drilling and Unum
Considering the 90-day investment horizon Precision Drilling is expected to generate 3.71 times more return on investment than Unum. However, Precision Drilling is 3.71 times more volatile than Unum Group. It trades about 0.05 of its potential returns per unit of risk. Unum Group is currently generating about 0.07 per unit of risk. If you would invest 4,620 in Precision Drilling on August 31, 2024 and sell it today you would earn a total of 1,697 from holding Precision Drilling or generate 36.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Unum Group
Performance |
| Timeline |
| Precision Drilling |
| Unum Group |
Precision Drilling and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Unum
The main advantage of trading using opposite Precision Drilling and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.| Precision Drilling vs. Nabors Industries | Precision Drilling vs. Patterson UTI Energy | Precision Drilling vs. Noble plc | Precision Drilling vs. Helmerich and Payne |
| Unum vs. AKITA Drilling | Unum vs. Nabors Industries | Unum vs. Getty Images Holdings | Unum 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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