Correlation Between Sable Offshore and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Shelf Drilling 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 Sable Offshore and Shelf Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and Shelf Drilling, you can compare the effects of market volatilities on Sable Offshore and Shelf Drilling 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 Sable Offshore with a short position of Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Shelf Drilling.
Diversification Opportunities for Sable Offshore and Shelf Drilling
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sable and Shelf is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of Sable Offshore i.e., Sable Offshore and Shelf Drilling go up and down completely randomly.
Pair Corralation between Sable Offshore and Shelf Drilling
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 0.46 times more return on investment than Shelf Drilling. However, Sable Offshore Corp is 2.18 times less risky than Shelf Drilling. It trades about 0.16 of its potential returns per unit of risk. Shelf Drilling is currently generating about -0.41 per unit of risk. If you would invest 2,105 in Sable Offshore Corp on August 31, 2024 and sell it today you would earn a total of 243.00 from holding Sable Offshore Corp or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sable Offshore Corp vs. Shelf Drilling
Performance |
| Timeline |
| Sable Offshore Corp |
| Shelf Drilling |
Sable Offshore and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Shelf Drilling
The main advantage of trading using opposite Sable Offshore and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, Shelf Drilling 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| Sable Offshore vs. Nabors Industries | Sable Offshore vs. Patterson UTI Energy | Sable Offshore vs. Noble plc | Sable Offshore vs. Helmerich and Payne |
| Shelf Drilling vs. Seadrill Limited | Shelf Drilling vs. Nabors Industries | Shelf Drilling vs. Borr Drilling | Shelf Drilling vs. Patterson UTI Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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