Correlation Between Noble Plc and Cathedral Energy

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

By analyzing existing cross correlation between Noble plc and Cathedral Energy Services, you can compare the effects of market volatilities on Noble Plc and Cathedral Energy 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 Noble Plc with a short position of Cathedral Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Cathedral Energy.

Diversification Opportunities for Noble Plc and Cathedral Energy

-0.23

Correlation Coefficient

Noble Plc  Cathedral Energy

Very good diversification

The 3 months correlation between Noble and Cathedral is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Cathedral Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedral Energy Services and Noble Plc 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 Noble plc are associated (or correlated) with Cathedral Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedral Energy Services has no effect on the direction of Noble Plc i.e., Noble Plc and Cathedral Energy go up and down completely randomly.

Pair Corralation between Noble Plc and Cathedral Energy

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Cathedral Energy. In addition to that, Noble Plc is 1.22 times more volatile than Cathedral Energy Services. It trades about -0.37 of its total potential returns per unit of risk. Cathedral Energy Services is currently generating about -0.06 per unit of volatility. If you would invest  452.00  in Cathedral Energy Services on September 26, 2024 and sell it today you would lose (10.00) from holding Cathedral Energy Services or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Noble plc  vs.  Cathedral Energy Services

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cathedral Energy Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cathedral Energy Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cathedral Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Noble Plc and Cathedral Energy

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

The idea behind Noble plc and Cathedral Energy Services 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.