Correlation Between NorAm Drilling and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Equitable Holdings 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 NorAm Drilling and Equitable Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and Equitable Holdings, you can compare the effects of market volatilities on NorAm Drilling and Equitable Holdings 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 NorAm Drilling with a short position of Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Equitable Holdings.
Diversification Opportunities for NorAm Drilling and Equitable Holdings
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and Equitable is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings and NorAm 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 NorAm Drilling AS are associated (or correlated) with Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Equitable Holdings go up and down completely randomly.
Pair Corralation between NorAm Drilling and Equitable Holdings
Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the Equitable Holdings. In addition to that, NorAm Drilling is 1.66 times more volatile than Equitable Holdings. It trades about -0.02 of its total potential returns per unit of risk. Equitable Holdings is currently generating about 0.12 per unit of volatility. If you would invest 4,158 in Equitable Holdings on September 1, 2024 and sell it today you would earn a total of 322.00 from holding Equitable Holdings or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NorAm Drilling AS vs. Equitable Holdings
Performance |
| Timeline |
| NorAm Drilling AS |
| Equitable Holdings |
NorAm Drilling and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Equitable Holdings
The main advantage of trading using opposite NorAm Drilling and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| NorAm Drilling vs. Martin Marietta Materials | NorAm Drilling vs. Reinsurance Group of | NorAm Drilling vs. ZURICH INSURANCE GROUP | NorAm Drilling vs. LIFENET INSURANCE CO |
| Equitable Holdings vs. NN Group NV | Equitable Holdings vs. Superior Plus Corp | Equitable Holdings vs. Origin Agritech | Equitable Holdings vs. Identiv |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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