Correlation Between Helmerich and Borr Drilling

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

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

Diversification Opportunities for Helmerich and Borr Drilling

-0.35

Correlation Coefficient

Helmerich  Borr Drilling

Very good diversification

The 3 months correlation between Helmerich and Borr is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Helmerich and Payne and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling and Helmerich 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 Helmerich and Payne 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 Helmerich i.e., Helmerich and Borr Drilling go up and down completely randomly.

Pair Corralation between Helmerich and Borr Drilling

Allowing for the 90-day total investment horizon Helmerich is expected to generate 3.52 times less return on investment than Borr Drilling. But when comparing it to its historical volatility, Helmerich and Payne is 1.5 times less risky than Borr Drilling. It trades about 0.01 of its potential returns per unit of risk. Borr Drilling is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  431.00  in Borr Drilling on January 31, 2024 and sell it today you would earn a total of  120.00  from holding Borr Drilling or generate 27.84% return on investment over 90 days.

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

Helmerich and Payne  vs.  Borr Drilling

Helmerich and Payne

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich and Payne are ranked lower than 2 (%) 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 latest stock price agitation, may contribute to short-term losses for the retail investors.

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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Helmerich and Borr Drilling

The main advantage of trading using opposite Helmerich and Borr Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helmerich 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 Helmerich and Payne 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.