Correlation Between Borr Drilling and Allient

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

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

Diversification Opportunities for Borr Drilling and Allient

-0.81

Correlation Coefficient

Borr Drilling  Allient

Pay attention - limited upside

The 3 months correlation between Borr and Allient is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Borr Drilling i.e., Borr Drilling and Allient go up and down completely randomly.

Pair Corralation between Borr Drilling and Allient

Given the investment horizon of 90 days Borr Drilling is expected to generate 1.17 times more return on investment than Allient. However, Borr Drilling is 1.17 times more volatile than Allient. It trades about 0.23 of its potential returns per unit of risk. Allient is currently generating about -0.16 per unit of risk. If you would invest  363.00  in Borr Drilling on October 8, 2024 and sell it today you would earn a total of  41.00  from holding Borr Drilling or generate 11.29% return on investment over 90 days.

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

Borr Drilling  vs.  Allient

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Allient

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Borr Drilling and Allient

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

The idea behind Borr Drilling and Allient 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.