Correlation Between Delek Drilling and Noble Plc

Can any of the company-specific risk be diversified away by investing in both Delek Drilling and Noble Plc 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 Delek Drilling and Noble Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Drilling and Noble plc, you can compare the effects of market volatilities on Delek Drilling and Noble Plc 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 Delek Drilling with a short position of Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and Noble Plc.

Diversification Opportunities for Delek Drilling and Noble Plc

0.31

Correlation Coefficient

Delek Drilling  Noble Plc

Weak diversification

The 3 months correlation between Delek and Noble is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc and Delek 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 Delek Drilling are associated (or correlated) with Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Delek Drilling i.e., Delek Drilling and Noble Plc go up and down completely randomly.

Pair Corralation between Delek Drilling and Noble Plc

Assuming the 90 days horizon Delek Drilling is expected to generate 3.02 times less return on investment than Noble Plc. In addition to that, Delek Drilling is 1.5 times more volatile than Noble plc. It trades about 0.03 of its total potential returns per unit of risk. Noble plc is currently generating about 0.12 per unit of volatility. If you would invest  4,253  in Noble plc on January 28, 2024 and sell it today you would earn a total of  376.00  from holding Noble plc or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Delek Drilling   vs.  Noble plc

Delek Drilling

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Delek Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Noble plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Noble plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Noble Plc is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Delek Drilling and Noble Plc

The main advantage of trading using opposite Delek Drilling and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling position performs unexpectedly, Noble Plc 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 Noble Plc will offset losses from the drop in Noble Plc's long position.

The idea behind Delek Drilling and Noble plc 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.