Correlation Between Vantage Drilling and FLT Old
Can any of the company-specific risk be diversified away by investing in both Vantage Drilling and FLT Old 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 Vantage Drilling and FLT Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vantage Drilling International and FLT Old, you can compare the effects of market volatilities on Vantage Drilling and FLT Old 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 Vantage Drilling with a short position of FLT Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vantage Drilling and FLT Old.
Diversification Opportunities for Vantage Drilling and FLT Old
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vantage and FLT is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vantage Drilling International and FLT Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLT Old and Vantage 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 Vantage Drilling International are associated (or correlated) with FLT Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLT Old has no effect on the direction of Vantage Drilling i.e., Vantage Drilling and FLT Old go up and down completely randomly.
Pair Corralation between Vantage Drilling and FLT Old
Assuming the 90 days horizon Vantage Drilling International is expected to generate 3.9 times more return on investment than FLT Old. However, Vantage Drilling is 3.9 times more volatile than FLT Old. It trades about 0.05 of its potential returns per unit of risk. FLT Old is currently generating about 0.04 per unit of risk. If you would invest 1,400 in Vantage Drilling International on October 24, 2024 and sell it today you would earn a total of 1,150 from holding Vantage Drilling International or generate 82.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.0% |
| Values | Daily Returns |
Vantage Drilling International vs. FLT Old
Performance |
| Timeline |
| Vantage Drilling Int |
| FLT Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vantage Drilling and FLT Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vantage Drilling and FLT Old
The main advantage of trading using opposite Vantage Drilling and FLT Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vantage Drilling position performs unexpectedly, FLT Old 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 FLT Old will offset losses from the drop in FLT Old's long position.| Vantage Drilling vs. AKITA Drilling | Vantage Drilling vs. Seadrill Limited | Vantage Drilling vs. Noble plc | Vantage Drilling vs. Borr Drilling |
| FLT Old vs. Vantage Drilling International | FLT Old vs. Helmerich and Payne | FLT Old vs. Integral Ad Science | FLT Old vs. Integrated Drilling Equipment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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