Correlation Between Borr Drilling and Dolphin Drilling

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

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

Diversification Opportunities for Borr Drilling and Dolphin Drilling

0.13

Correlation Coefficient

Borr Drilling  Dolphin Drilling

Average diversification

The 3 months correlation between Borr and Dolphin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Dolphin Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Drilling and Borr 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 Borr Drilling are associated (or correlated) with Dolphin Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Drilling has no effect on the direction of Borr Drilling i.e., Borr Drilling and Dolphin Drilling go up and down completely randomly.

Pair Corralation between Borr Drilling and Dolphin Drilling

Assuming the 90 days trading horizon Borr Drilling is expected to under-perform the Dolphin Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Borr Drilling is 1.1 times less risky than Dolphin Drilling. The stock trades about -0.17 of its potential returns per unit of risk. The Dolphin Drilling AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Dolphin Drilling AS on September 23, 2024 and sell it today you would lose (10.00) from holding Dolphin Drilling AS or give up 3.33% of portfolio value over 90 days.

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

Borr Drilling  vs.  Dolphin Drilling AS

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. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dolphin Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dolphin Drilling is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Borr Drilling and Dolphin Drilling

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

The idea behind Borr Drilling and Dolphin Drilling AS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..