Correlation Between Pine Cliff and Seadrill
Can any of the company-specific risk be diversified away by investing in both Pine Cliff and Seadrill 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 Pine Cliff and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pine Cliff Energy and Seadrill Limited, you can compare the effects of market volatilities on Pine Cliff and Seadrill 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 Pine Cliff with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Seadrill.
Diversification Opportunities for Pine Cliff and Seadrill
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pine and Seadrill is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Pine Cliff i.e., Pine Cliff and Seadrill go up and down completely randomly.
Pair Corralation between Pine Cliff and Seadrill
Assuming the 90 days horizon Pine Cliff Energy is expected to under-perform the Seadrill. In addition to that, Pine Cliff is 1.22 times more volatile than Seadrill Limited. It trades about -0.05 of its total potential returns per unit of risk. Seadrill Limited is currently generating about 0.03 per unit of volatility. If you would invest 3,858 in Seadrill Limited on September 12, 2024 and sell it today you would earn a total of 138.00 from holding Seadrill Limited or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pine Cliff Energy vs. Seadrill Limited
Performance |
| Timeline |
| Pine Cliff Energy |
| Seadrill Limited |
Pine Cliff and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pine Cliff and Seadrill
The main advantage of trading using opposite Pine Cliff and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pine Cliff position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Pine Cliff vs. Athabasca Oil Corp | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Tamarack Valley Energy | Pine Cliff vs. Saturn Oil Gas |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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