Correlation Between NorAm Drilling and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and SEALED AIR 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 SEALED AIR 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 SEALED AIR , you can compare the effects of market volatilities on NorAm Drilling and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and SEALED AIR.
Diversification Opportunities for NorAm Drilling and SEALED AIR
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NorAm and SEALED is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and SEALED AIR go up and down completely randomly.
Pair Corralation between NorAm Drilling and SEALED AIR
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 2.26 times more return on investment than SEALED AIR. However, NorAm Drilling is 2.26 times more volatile than SEALED AIR . It trades about 0.12 of its potential returns per unit of risk. SEALED AIR is currently generating about 0.02 per unit of risk. If you would invest 187.00 in NorAm Drilling AS on October 18, 2024 and sell it today you would earn a total of 121.00 from holding NorAm Drilling AS or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
NorAm Drilling AS vs. SEALED AIR
Performance |
| Timeline |
| NorAm Drilling AS |
| SEALED AIR |
NorAm Drilling and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and SEALED AIR
The main advantage of trading using opposite NorAm Drilling and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| NorAm Drilling vs. DIVERSIFIED ROYALTY | NorAm Drilling vs. Harmony Gold Mining | NorAm Drilling vs. Apollo Investment Corp | NorAm Drilling vs. CHRYSALIS INVESTMENTS LTD |
| SEALED AIR vs. NorAm Drilling AS | SEALED AIR vs. Zoom Video Communications | SEALED AIR vs. PARKEN Sport Entertainment | SEALED AIR vs. Major Drilling Group |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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