Correlation Between Seadrill and LENSAR
Can any of the company-specific risk be diversified away by investing in both Seadrill and LENSAR 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 LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and LENSAR Inc, you can compare the effects of market volatilities on Seadrill and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and LENSAR.
Diversification Opportunities for Seadrill and LENSAR
Average diversification
The 3 months correlation between Seadrill and LENSAR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Seadrill i.e., Seadrill and LENSAR go up and down completely randomly.
Pair Corralation between Seadrill and LENSAR
Given the investment horizon of 90 days Seadrill Limited is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, Seadrill Limited is 1.04 times less risky than LENSAR. The stock trades about -0.05 of its potential returns per unit of risk. The LENSAR Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 739.00 in LENSAR Inc on September 14, 2024 and sell it today you would earn a total of 25.00 from holding LENSAR Inc or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seadrill Limited vs. LENSAR Inc
Performance |
| Timeline |
| Seadrill Limited |
| LENSAR Inc |
Seadrill and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and LENSAR
The main advantage of trading using opposite Seadrill and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
| LENSAR vs. Avita Medical | LENSAR vs. Sight Sciences | LENSAR vs. Treace Medical Concepts | LENSAR vs. Neuropace |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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