Correlation Between SPACE and Borr Drilling

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

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

Diversification Opportunities for SPACE and Borr Drilling

0.85

Correlation Coefficient

SPACE  Borr Drilling

Very poor diversification

The 3 months correlation between SPACE and Borr is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and SPACE 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 SPACE are associated (or correlated) with Borr Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borr Drilling has no effect on the direction of SPACE i.e., SPACE and Borr Drilling go up and down completely randomly.

Pair Corralation between SPACE and Borr Drilling

Assuming the 90 days horizon SPACE is expected to under-perform the Borr Drilling. In addition to that, SPACE is 1.86 times more volatile than Borr Drilling. It trades about -0.11 of its total potential returns per unit of risk. Borr Drilling is currently generating about -0.18 per unit of volatility. If you would invest  360.00  in Borr Drilling on December 27, 2024 and sell it today you would lose (122.00) from holding Borr Drilling or give up 33.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.83%
Values	Daily Returns

SPACE  vs.  Borr Drilling

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Borr Drilling

Risk-Adjusted Performance

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

Pair Trading with SPACE and Borr Drilling

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

The idea behind SPACE and Borr Drilling 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .