Correlation Between Noble Plc and Borr Drilling

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

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

Diversification Opportunities for Noble Plc and Borr Drilling

-0.03

Correlation Coefficient

Noble Plc  Borr Drilling

Good diversification

The 3 months correlation between Noble and Borr is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and Noble Plc 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 Noble plc 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 has no effect on the direction of Noble Plc i.e., Noble Plc and Borr Drilling go up and down completely randomly.

Pair Corralation between Noble Plc and Borr Drilling

Allowing for the 90-day total investment horizon Noble plc is expected to generate 0.72 times more return on investment than Borr Drilling. However, Noble plc is 1.4 times less risky than Borr Drilling. It trades about 0.04 of its potential returns per unit of risk. Borr Drilling is currently generating about 0.01 per unit of risk. If you would invest  3,840  in Noble plc on January 29, 2024 and sell it today you would earn a total of  789.00  from holding Noble plc or generate 20.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Noble plc  vs.  Borr Drilling

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Borr Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borr Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Noble Plc and Borr Drilling

The main advantage of trading using opposite Noble Plc and Borr Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc 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.

The idea behind Noble plc and Borr Drilling 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.