Correlation Between BORR DRILLING and Vestas Wind

Can any of the company-specific risk be diversified away by investing in both BORR DRILLING and Vestas Wind 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 BORR DRILLING and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BORR DRILLING NEW and Vestas Wind Systems, you can compare the effects of market volatilities on BORR DRILLING and Vestas Wind 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 BORR DRILLING with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and Vestas Wind.

Diversification Opportunities for BORR DRILLING and Vestas Wind

-0.59

Correlation Coefficient

BORR DRILLING  Vestas Wind

Excellent diversification

The 3 months correlation between BORR and Vestas is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and BORR 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 BORR DRILLING NEW are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and Vestas Wind go up and down completely randomly.

Pair Corralation between BORR DRILLING and Vestas Wind

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Vestas Wind. In addition to that, BORR DRILLING is 1.39 times more volatile than Vestas Wind Systems. It trades about -0.2 of its total potential returns per unit of risk. Vestas Wind Systems is currently generating about 0.09 per unit of volatility. If you would invest  1,335  in Vestas Wind Systems on December 21, 2024 and sell it today you would earn a total of  175.00  from holding Vestas Wind Systems or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BORR DRILLING NEW  vs.  Vestas Wind Systems

BORR DRILLING NEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vestas Wind Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vestas Wind Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Vestas Wind exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BORR DRILLING and Vestas Wind

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

The idea behind BORR DRILLING NEW and Vestas Wind Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.