Correlation Between Diamond Offshore and Seadrill

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

By analyzing existing cross correlation between Diamond Offshore Drilling and Seadrill Limited, you can compare the effects of market volatilities on Diamond Offshore 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 Diamond Offshore with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Offshore and Seadrill.

Diversification Opportunities for Diamond Offshore and Seadrill

0.0

Correlation Coefficient

Diamond Offshore  Seadrill

Pay attention - limited upside

The 3 months correlation between Diamond and Seadrill is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Offshore Drilling and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Diamond Offshore 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 Diamond Offshore Drilling 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 Diamond Offshore i.e., Diamond Offshore and Seadrill go up and down completely randomly.

Pair Corralation between Diamond Offshore and Seadrill

If you would invest (100.00) in Diamond Offshore Drilling on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Diamond Offshore Drilling or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Diamond Offshore Drilling  vs.  Seadrill Limited

Diamond Offshore Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Offshore Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Diamond Offshore is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Seadrill Limited

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with Diamond Offshore and Seadrill

The main advantage of trading using opposite Diamond Offshore and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Offshore 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 Diamond Offshore Drilling 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.

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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.