Correlation Between Shelf Drilling and Morrow Bank
Can any of the company-specific risk be diversified away by investing in both Shelf Drilling and Morrow Bank 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 Shelf Drilling and Morrow Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelf Drilling and Morrow Bank ASA, you can compare the effects of market volatilities on Shelf Drilling and Morrow Bank 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 Shelf Drilling with a short position of Morrow Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelf Drilling and Morrow Bank.
Diversification Opportunities for Shelf Drilling and Morrow Bank
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shelf and Morrow is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and Morrow Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morrow Bank ASA and Shelf 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 Shelf Drilling are associated (or correlated) with Morrow Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morrow Bank ASA has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and Morrow Bank go up and down completely randomly.
Pair Corralation between Shelf Drilling and Morrow Bank
Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Morrow Bank. In addition to that, Shelf Drilling is 2.95 times more volatile than Morrow Bank ASA. It trades about -0.22 of its total potential returns per unit of risk. Morrow Bank ASA is currently generating about 0.52 per unit of volatility. If you would invest 660.00 in Morrow Bank ASA on September 3, 2024 and sell it today you would earn a total of 194.00 from holding Morrow Bank ASA or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelf Drilling vs. Morrow Bank ASA
Performance |
| Timeline |
| Shelf Drilling |
| Morrow Bank ASA |
Shelf Drilling and Morrow Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelf Drilling and Morrow Bank
The main advantage of trading using opposite Shelf Drilling and Morrow Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf Drilling position performs unexpectedly, Morrow Bank 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 Morrow Bank will offset losses from the drop in Morrow Bank's long position.| Shelf Drilling vs. BW Offshore | Shelf Drilling vs. Subsea 7 SA | Shelf Drilling vs. Elkem ASA | Shelf Drilling vs. Integrated Wind Solutions |
| Morrow Bank vs. Equinor ASA | Morrow Bank vs. DnB ASA | Morrow Bank vs. Aker BP ASA | Morrow Bank vs. Telenor ASA |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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