Correlation Between Noble Plc and Par Pacific

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

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

Diversification Opportunities for Noble Plc and Par Pacific

0.96

Correlation Coefficient

Noble Plc  Par Pacific

Almost no diversification

The 3 months correlation between Noble and Par is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Noble Plc i.e., Noble Plc and Par Pacific go up and down completely randomly.

Pair Corralation between Noble Plc and Par Pacific

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Par Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 1.29 times less risky than Par Pacific. The stock trades about -0.09 of its potential returns per unit of risk. The Par Pacific Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,634  in Par Pacific Holdings on December 26, 2024 and sell it today you would lose (211.00) from holding Par Pacific Holdings or give up 12.91% of portfolio value over 90 days.

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

Noble plc  vs.  Par Pacific Holdings

Noble plc

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Par Pacific Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Noble Plc and Par Pacific

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

The idea behind Noble plc and Par Pacific Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.