Correlation Between Noble Plc and Simon Property

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

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

Diversification Opportunities for Noble Plc and Simon Property

0.36

Correlation Coefficient

Noble Plc  Simon Property

Weak diversification

The 3 months correlation between Noble and Simon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Noble Plc i.e., Noble Plc and Simon Property go up and down completely randomly.

Pair Corralation between Noble Plc and Simon Property

Allowing for the 90-day total investment horizon Noble Plc is expected to generate 49.15 times less return on investment than Simon Property. In addition to that, Noble Plc is 1.61 times more volatile than Simon Property Group. It trades about 0.0 of its total potential returns per unit of risk. Simon Property Group is currently generating about 0.07 per unit of volatility. If you would invest  11,255  in Simon Property Group on October 21, 2024 and sell it today you would earn a total of  6,159  from holding Simon Property Group or generate 54.72% return on investment over 90 days.

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

Noble plc  vs.  Simon Property Group

Noble plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Noble plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Noble Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Simon Property Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Noble Plc and Simon Property

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

The idea behind Noble plc and Simon Property Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.