Correlation Between Noble Plc and Tourmaline Oil

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

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

Diversification Opportunities for Noble Plc and Tourmaline Oil

0.04

Correlation Coefficient

Noble Plc  Tourmaline Oil

Significant diversification

The 3 months correlation between Noble and Tourmaline is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil 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 Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of Noble Plc i.e., Noble Plc and Tourmaline Oil go up and down completely randomly.

Pair Corralation between Noble Plc and Tourmaline Oil

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Tourmaline Oil. In addition to that, Noble Plc is 1.47 times more volatile than Tourmaline Oil Corp. It trades about -0.03 of its total potential returns per unit of risk. Tourmaline Oil Corp is currently generating about 0.09 per unit of volatility. If you would invest  4,305  in Tourmaline Oil Corp on September 3, 2024 and sell it today you would earn a total of  406.00  from holding Tourmaline Oil Corp or generate 9.43% return on investment over 90 days.

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

Noble plc  vs.  Tourmaline Oil 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.

Tourmaline Oil Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Oil Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Tourmaline Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Noble Plc and Tourmaline Oil

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

The idea behind Noble plc and Tourmaline Oil 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.