Correlation Between Seadrill and Joint Corp

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

By analyzing existing cross correlation between Seadrill Limited and The Joint Corp, you can compare the effects of market volatilities on Seadrill and Joint 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 Seadrill with a short position of Joint Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and Joint Corp.

Diversification Opportunities for Seadrill and Joint Corp

-0.49

Correlation Coefficient

Seadrill  Joint Corp

Very good diversification

The 3 months correlation between Seadrill and Joint is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp and Seadrill 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 Seadrill Limited are associated (or correlated) with Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Seadrill i.e., Seadrill and Joint Corp go up and down completely randomly.

Pair Corralation between Seadrill and Joint Corp

Given the investment horizon of 90 days Seadrill Limited is expected to under-perform the Joint Corp. In addition to that, Seadrill is 1.1 times more volatile than The Joint Corp. It trades about -0.25 of its total potential returns per unit of risk. The Joint Corp is currently generating about 0.19 per unit of volatility. If you would invest  995.00  in The Joint Corp on December 28, 2024 and sell it today you would earn a total of  280.00  from holding The Joint Corp or generate 28.14% return on investment over 90 days.

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

Seadrill Limited  vs.  The Joint Corp

Seadrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Joint Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Joint Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Joint Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seadrill and Joint Corp

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

The idea behind Seadrill Limited and The Joint 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.