Correlation Between NorAm Drilling and EBay
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and EBay 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 NorAm Drilling and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and eBay Inc, you can compare the effects of market volatilities on NorAm Drilling and EBay 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 NorAm Drilling with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and EBay.
Diversification Opportunities for NorAm Drilling and EBay
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NorAm and EBay is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and NorAm Drilling 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 NorAm Drilling AS are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and EBay go up and down completely randomly.
Pair Corralation between NorAm Drilling and EBay
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.5 times more return on investment than EBay. However, NorAm Drilling is 2.5 times more volatile than eBay Inc. It trades about 0.03 of its potential returns per unit of risk. eBay Inc is currently generating about 0.03 per unit of risk. If you would invest 277.00 in NorAm Drilling AS on December 28, 2024 and sell it today you would lose (1.00) from holding NorAm Drilling AS or give up 0.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NorAm Drilling AS vs. eBay Inc
Performance |
Timeline |
NorAm Drilling AS |
eBay Inc |
NorAm Drilling and EBay Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NorAm Drilling and EBay
The main advantage of trading using opposite NorAm Drilling and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.NorAm Drilling vs. UNITED UTILITIES GR | NorAm Drilling vs. FAST RETAIL ADR | NorAm Drilling vs. Costco Wholesale Corp | NorAm Drilling vs. JIAHUA STORES |
EBay vs. Geely Automobile Holdings | EBay vs. Universal Display | EBay vs. Computer And Technologies | EBay vs. COMPUTERSHARE |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |