Correlation Between Noble Plc and Valmont Industries

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

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

Diversification Opportunities for Noble Plc and Valmont Industries

-0.09

Correlation Coefficient

Noble Plc  Valmont Industries

Good diversification

The 3 months correlation between Noble and Valmont is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Valmont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmont Industries 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 Valmont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmont Industries has no effect on the direction of Noble Plc i.e., Noble Plc and Valmont Industries go up and down completely randomly.

Pair Corralation between Noble Plc and Valmont Industries

Allowing for the 90-day total investment horizon Noble plc is expected to generate 1.38 times more return on investment than Valmont Industries. However, Noble Plc is 1.38 times more volatile than Valmont Industries. It trades about 0.04 of its potential returns per unit of risk. Valmont Industries is currently generating about -0.01 per unit of risk. If you would invest  3,285  in Noble plc on January 24, 2024 and sell it today you would earn a total of  1,348  from holding Noble plc or generate 41.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Noble plc  vs.  Valmont Industries

Noble plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Noble plc are ranked lower than 4 (%) 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.

Valmont Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valmont Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Valmont Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Noble Plc and Valmont Industries

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

The idea behind Noble plc and Valmont Industries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..