Correlation Between Diamond Offshore and Helmerich

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

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

Diversification Opportunities for Diamond Offshore and Helmerich

0.6

Correlation Coefficient

Diamond Offshore  Helmerich

Poor diversification

The 3 months correlation between Diamond and Helmerich is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Offshore Drilling and Helmerich and Payne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helmerich and Payne and Diamond 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 Diamond Offshore Drilling are associated (or correlated) with Helmerich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helmerich and Payne has no effect on the direction of Diamond Offshore i.e., Diamond Offshore and Helmerich go up and down completely randomly.

Pair Corralation between Diamond Offshore and Helmerich

Allowing for the 90-day total investment horizon Diamond Offshore Drilling is expected to generate 1.55 times more return on investment than Helmerich. However, Diamond Offshore is 1.55 times more volatile than Helmerich and Payne. It trades about 0.09 of its potential returns per unit of risk. Helmerich and Payne is currently generating about -0.16 per unit of risk. If you would invest  1,376  in Diamond Offshore Drilling on February 14, 2024 and sell it today you would earn a total of  67.50  from holding Diamond Offshore Drilling or generate 4.91% return on investment over 90 days.

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

Diamond Offshore Drilling  vs.  Helmerich and Payne

Diamond Offshore Drilling

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Offshore Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Diamond Offshore displayed solid returns over the last few months and may actually be approaching a breakup point.

Helmerich and Payne

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich and Payne are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Helmerich is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Diamond Offshore and Helmerich

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

The idea behind Diamond Offshore Drilling and Helmerich and Payne 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.