Correlation Between NorAm Drilling and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and BORR 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 NorAm Drilling and BORR DRILLING 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 BORR DRILLING NEW, you can compare the effects of market volatilities on NorAm Drilling and BORR 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 NorAm Drilling with a short position of BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and BORR DRILLING.
Diversification Opportunities for NorAm Drilling and BORR DRILLING
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and BORR is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and BORR DRILLING go up and down completely randomly.
Pair Corralation between NorAm Drilling and BORR DRILLING
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 0.69 times more return on investment than BORR DRILLING. However, NorAm Drilling AS is 1.46 times less risky than BORR DRILLING. It trades about 0.1 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.55 per unit of risk. If you would invest 282.00 in NorAm Drilling AS on December 4, 2024 and sell it today you would earn a total of 9.00 from holding NorAm Drilling AS or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. BORR DRILLING NEW
Performance |
| Timeline |
| NorAm Drilling AS |
| BORR DRILLING NEW |
NorAm Drilling and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and BORR DRILLING
The main advantage of trading using opposite NorAm Drilling and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, BORR 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| NorAm Drilling vs. Elmos Semiconductor SE | NorAm Drilling vs. Nordic Semiconductor ASA | NorAm Drilling vs. SPORT LISBOA E | NorAm Drilling vs. ELMOS SEMICONDUCTOR |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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