Correlation Between Seadrill and Pinterest

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

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

Diversification Opportunities for Seadrill and Pinterest

-0.29

Correlation Coefficient

Seadrill  Pinterest

Very good diversification

The 3 months correlation between Seadrill and Pinterest is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Seadrill i.e., Seadrill and Pinterest go up and down completely randomly.

Pair Corralation between Seadrill and Pinterest

Given the investment horizon of 90 days Seadrill is expected to generate 3.61 times less return on investment than Pinterest. In addition to that, Seadrill is 1.01 times more volatile than Pinterest. It trades about 0.02 of its total potential returns per unit of risk. Pinterest is currently generating about 0.07 per unit of volatility. If you would invest  2,941  in Pinterest on September 8, 2024 and sell it today you would earn a total of  287.00  from holding Pinterest or generate 9.76% return on investment over 90 days.

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

Seadrill Limited  vs.  Pinterest

Seadrill Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seadrill Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Seadrill is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pinterest

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seadrill and Pinterest

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

The idea behind Seadrill Limited and Pinterest 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.