Correlation Between Uber Technologies and Seadrill

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

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

Diversification Opportunities for Uber Technologies and Seadrill

0.08

Correlation Coefficient

Uber Technologies  Seadrill

Significant diversification

The 3 months correlation between Uber and Seadrill is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Uber Technologies 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 Uber Technologies are associated (or correlated) with Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Uber Technologies i.e., Uber Technologies and Seadrill go up and down completely randomly.

Pair Corralation between Uber Technologies and Seadrill

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.09 times more return on investment than Seadrill. However, Uber Technologies is 1.09 times more volatile than Seadrill Limited. It trades about 0.06 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.0 per unit of risk. If you would invest  4,317  in Uber Technologies on October 22, 2024 and sell it today you would earn a total of  2,417  from holding Uber Technologies or generate 55.99% return on investment over 90 days.

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

Uber Technologies  vs.  Seadrill Limited

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seadrill Limited

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seadrill Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Seadrill may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Uber Technologies and Seadrill

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

The idea behind Uber Technologies and Seadrill Limited 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.