Correlation Between Cathedral Energy and Seadrill

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cathedral Energy and Seadrill 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 Cathedral Energy and Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathedral Energy Services and Seadrill Limited, you can compare the effects of market volatilities on Cathedral Energy and Seadrill 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 Cathedral Energy with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathedral Energy and Seadrill.

Diversification Opportunities for Cathedral Energy and Seadrill

0.09
  Correlation Coefficient

Significant diversification

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

Pair Corralation between Cathedral Energy and Seadrill

Assuming the 90 days horizon Cathedral Energy Services is expected to generate 0.62 times more return on investment than Seadrill. However, Cathedral Energy Services is 1.61 times less risky than Seadrill. It trades about -0.32 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.71 per unit of risk. If you would invest  434.00  in Cathedral Energy Services on December 2, 2024 and sell it today you would lose (41.00) from holding Cathedral Energy Services or give up 9.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cathedral Energy Services  vs.  Seadrill Limited

 Performance 
       Timeline  
Cathedral Energy Services 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Cathedral Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental 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.
Seadrill Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cathedral Energy and Seadrill Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cathedral Energy and Seadrill

The main advantage of trading using opposite Cathedral Energy and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedral Energy position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.
The idea behind Cathedral Energy Services and Seadrill Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

Other Complementary Tools

My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins