Correlation Between Sable Offshore and Borr Drilling

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

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

Diversification Opportunities for Sable Offshore and Borr Drilling

0.24

Correlation Coefficient

Sable Offshore  Borr Drilling

Modest diversification

The 3 months correlation between Sable and Borr is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with Borr Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borr Drilling has no effect on the direction of Sable Offshore i.e., Sable Offshore and Borr Drilling go up and down completely randomly.

Pair Corralation between Sable Offshore and Borr Drilling

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.63 times more return on investment than Borr Drilling. However, Sable Offshore is 1.63 times more volatile than Borr Drilling. It trades about 0.0 of its potential returns per unit of risk. Borr Drilling is currently generating about -0.12 per unit of risk. If you would invest  2,302  in Sable Offshore Corp on September 22, 2024 and sell it today you would lose (75.00) from holding Sable Offshore Corp or give up 3.26% of portfolio value over 90 days.

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

Sable Offshore Corp  vs.  Borr Drilling

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Borr Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borr Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sable Offshore and Borr Drilling

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

The idea behind Sable Offshore Corp and Borr Drilling 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.