Correlation Between Source Energy and Seadrill
Can any of the company-specific risk be diversified away by investing in both Source Energy 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 Source Energy and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Source Energy Services and Seadrill Limited, you can compare the effects of market volatilities on Source Energy 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 Source Energy with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Source Energy and Seadrill.
Diversification Opportunities for Source Energy and Seadrill
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Source and Seadrill is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Source Energy Services and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Source Energy 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 Source Energy Services 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 Source Energy i.e., Source Energy and Seadrill go up and down completely randomly.
Pair Corralation between Source Energy and Seadrill
Assuming the 90 days horizon Source Energy Services is expected to generate 1.45 times more return on investment than Seadrill. However, Source Energy is 1.45 times more volatile than Seadrill Limited. It trades about 0.2 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.05 per unit of risk. If you would invest 1,084 in Source Energy Services on September 12, 2024 and sell it today you would earn a total of 149.00 from holding Source Energy Services or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Source Energy Services vs. Seadrill Limited
Performance |
| Timeline |
| Source Energy Services |
| Seadrill Limited |
Source Energy and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Source Energy and Seadrill
The main advantage of trading using opposite Source Energy and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Source Energy 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.| Source Energy vs. Total Energy Services | Source Energy vs. Trican Well Service | Source Energy vs. STEP Energy Services | Source Energy vs. High Arctic Energy |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Transocean | Seadrill 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |