Correlation Between Noble Plc and Logan Ridge

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

By analyzing existing cross correlation between Noble plc and Logan Ridge Finance, you can compare the effects of market volatilities on Noble Plc and Logan Ridge 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 Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Plc and Logan Ridge.

Diversification Opportunities for Noble Plc and Logan Ridge

-0.42

Correlation Coefficient

Noble Plc  Logan Ridge

Very good diversification

The 3 months correlation between Noble and Logan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Noble Plc i.e., Noble Plc and Logan Ridge go up and down completely randomly.

Pair Corralation between Noble Plc and Logan Ridge

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Logan Ridge. In addition to that, Noble Plc is 2.05 times more volatile than Logan Ridge Finance. It trades about -0.12 of its total potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.05 per unit of volatility. If you would invest  2,412  in Logan Ridge Finance on September 21, 2024 and sell it today you would earn a total of  73.00  from holding Logan Ridge Finance or generate 3.03% return on investment over 90 days.

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

Noble plc  vs.  Logan Ridge Finance

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.

Logan Ridge Finance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Noble Plc and Logan Ridge

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

The idea behind Noble plc and Logan Ridge Finance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.