Correlation Between Worthington Industries and Noble Plc

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

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

Diversification Opportunities for Worthington Industries and Noble Plc

0.2

Correlation Coefficient

Worthington Industries  Noble Plc

Modest diversification

The 3 months correlation between Worthington and Noble is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc and Worthington Industries 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 Worthington Industries 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 Worthington Industries i.e., Worthington Industries and Noble Plc go up and down completely randomly.

Pair Corralation between Worthington Industries and Noble Plc

Considering the 90-day investment horizon Worthington Industries is expected to under-perform the Noble Plc. In addition to that, Worthington Industries is 1.59 times more volatile than Noble plc. It trades about -0.17 of its total potential returns per unit of risk. Noble plc is currently generating about 0.04 per unit of volatility. If you would invest  4,738  in Noble plc on January 17, 2024 and sell it today you would earn a total of  51.00  from holding Noble plc or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Worthington Industries  vs.  Noble plc

Worthington Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Worthington Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Worthington Industries may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Noble plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Noble plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Noble Plc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Worthington Industries and Noble Plc

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

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.