Correlation Between Noble Plc and PVH Corp

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

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

Diversification Opportunities for Noble Plc and PVH Corp

-0.07

Correlation Coefficient

Noble Plc  PVH Corp

Good diversification

The 3 months correlation between Noble and PVH is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Noble Plc i.e., Noble Plc and PVH Corp go up and down completely randomly.

Pair Corralation between Noble Plc and PVH Corp

Allowing for the 90-day total investment horizon Noble Plc is expected to generate 1.32 times less return on investment than PVH Corp. In addition to that, Noble Plc is 1.51 times more volatile than PVH Corp. It trades about 0.13 of its total potential returns per unit of risk. PVH Corp is currently generating about 0.26 per unit of volatility. If you would invest  10,034  in PVH Corp on September 5, 2024 and sell it today you would earn a total of  1,125  from holding PVH Corp or generate 11.21% return on investment over 90 days.

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

Noble plc  vs.  PVH Corp

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 rather sound technical and fundamental indicators, Noble Plc is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PVH Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PVH Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, PVH Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Noble Plc and PVH Corp

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

The idea behind Noble plc and PVH Corp 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 CEOs Directory module to screen CEOs from public companies around the world.