Correlation Between Seadrill and Barclays Capital

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Can any of the company-specific risk be diversified away by investing in both Seadrill and Barclays Capital 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 Seadrill and Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and Barclays Capital, you can compare the effects of market volatilities on Seadrill and Barclays Capital 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 Seadrill with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and Barclays Capital.

Diversification Opportunities for Seadrill and Barclays Capital

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Seadrill and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and Seadrill 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 Seadrill Limited are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Seadrill i.e., Seadrill and Barclays Capital go up and down completely randomly.

Pair Corralation between Seadrill and Barclays Capital

If you would invest  4,307  in Seadrill Limited on December 29, 2023 and sell it today you would earn a total of  695.00  from holding Seadrill Limited or generate 16.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Seadrill Limited  vs.  Barclays Capital

 Performance 
       Timeline  
Seadrill Limited 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Seadrill Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Seadrill may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Barclays Capital 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Seadrill and Barclays Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Seadrill and Barclays Capital

The main advantage of trading using opposite Seadrill and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.
The idea behind Seadrill Limited and Barclays Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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