Correlation Between Seadrill and Vantage Drilling
Can any of the company-specific risk be diversified away by investing in both Seadrill and Vantage 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 Seadrill and Vantage Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and Vantage Drilling International, you can compare the effects of market volatilities on Seadrill and Vantage 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 Seadrill with a short position of Vantage Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and Vantage Drilling.
Diversification Opportunities for Seadrill and Vantage Drilling
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seadrill and Vantage is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Vantage Drilling International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vantage Drilling Int and Seadrill 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 Seadrill Limited are associated (or correlated) with Vantage Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vantage Drilling Int has no effect on the direction of Seadrill i.e., Seadrill and Vantage Drilling go up and down completely randomly.
Pair Corralation between Seadrill and Vantage Drilling
Given the investment horizon of 90 days Seadrill Limited is expected to generate 20.8 times more return on investment than Vantage Drilling. However, Seadrill is 20.8 times more volatile than Vantage Drilling International. It trades about 0.2 of its potential returns per unit of risk. Vantage Drilling International is currently generating about 0.1 per unit of risk. If you would invest 2,048 in Seadrill Limited on April 23, 2025 and sell it today you would earn a total of 749.00 from holding Seadrill Limited or generate 36.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seadrill Limited vs. Vantage Drilling International
Performance |
| Timeline |
| Seadrill Limited |
| Vantage Drilling Int |
Seadrill and Vantage Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and Vantage Drilling
The main advantage of trading using opposite Seadrill and Vantage Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, Vantage 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 Vantage Drilling will offset losses from the drop in Vantage Drilling's long position.| Seadrill vs. Noble plc | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Nabors Industries |
| Vantage Drilling vs. PHX Energy Services | Vantage Drilling vs. Total Energy Services | Vantage Drilling vs. Prairie Provident Resources | Vantage Drilling vs. Unit Corporation |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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