Correlation Between Seadrill and Capital Clean
Can any of the company-specific risk be diversified away by investing in both Seadrill and Capital Clean 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 Seadrill and Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and Capital Clean Energy, you can compare the effects of market volatilities on Seadrill and Capital Clean 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 Seadrill with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and Capital Clean.
Diversification Opportunities for Seadrill and Capital Clean
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seadrill and Capital is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Seadrill 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 Seadrill Limited are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Seadrill i.e., Seadrill and Capital Clean go up and down completely randomly.
Pair Corralation between Seadrill and Capital Clean
Given the investment horizon of 90 days Seadrill Limited is expected to generate 1.66 times more return on investment than Capital Clean. However, Seadrill is 1.66 times more volatile than Capital Clean Energy. It trades about 0.1 of its potential returns per unit of risk. Capital Clean Energy is currently generating about -0.07 per unit of risk. If you would invest 3,793 in Seadrill Limited on August 29, 2024 and sell it today you would earn a total of 194.00 from holding Seadrill Limited or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seadrill Limited vs. Capital Clean Energy
Performance |
| Timeline |
| Seadrill Limited |
| Capital Clean Energy |
Seadrill and Capital Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and Capital Clean
The main advantage of trading using opposite Seadrill and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, Capital Clean 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 Capital Clean will offset losses from the drop in Capital Clean's long position.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
| Capital Clean vs. Star Bulk Carriers | Capital Clean vs. TOP Ships | Capital Clean vs. Seanergy Maritime Holdings | Capital Clean vs. Performance Shipping |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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