Correlation Between Noble Plc and WESTAR

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

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

Diversification Opportunities for Noble Plc and WESTAR

-0.34

Correlation Coefficient

Noble Plc  WESTAR

Very good diversification

The 3 months correlation between Noble and WESTAR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and WESTAR ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTAR ENERGY INC 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 WESTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTAR ENERGY INC has no effect on the direction of Noble Plc i.e., Noble Plc and WESTAR go up and down completely randomly.

Pair Corralation between Noble Plc and WESTAR

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the WESTAR. In addition to that, Noble Plc is 7.13 times more volatile than WESTAR ENERGY INC. It trades about -0.12 of its total potential returns per unit of risk. WESTAR ENERGY INC is currently generating about -0.1 per unit of volatility. If you would invest  9,726  in WESTAR ENERGY INC on December 30, 2024 and sell it today you would lose (134.00) from holding WESTAR ENERGY INC or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.68%
Values	Daily Returns

Noble plc  vs.  WESTAR ENERGY INC

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.

WESTAR ENERGY INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESTAR ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESTAR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Noble Plc and WESTAR

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

The idea behind Noble plc and WESTAR ENERGY INC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.