Correlation Between Sealed Air and SBM Offshore

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Sealed Air and SBM Offshore 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 Sealed Air and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and SBM Offshore NV, you can compare the effects of market volatilities on Sealed Air and SBM Offshore 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 Sealed Air with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and SBM Offshore.

Diversification Opportunities for Sealed Air and SBM Offshore

0.13
  Correlation Coefficient

Average diversification

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

Pair Corralation between Sealed Air and SBM Offshore

Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the SBM Offshore. In addition to that, Sealed Air is 1.54 times more volatile than SBM Offshore NV. It trades about -0.25 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about -0.37 per unit of volatility. If you would invest  1,777  in SBM Offshore NV on September 24, 2024 and sell it today you would lose (132.00) from holding SBM Offshore NV or give up 7.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Sealed Air Corp  vs.  SBM Offshore NV

 Performance 
       Timeline  
Sealed Air Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
SBM Offshore NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, SBM Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sealed Air and SBM Offshore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and SBM Offshore

The main advantage of trading using opposite Sealed Air and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.
The idea behind Sealed Air Corp and SBM Offshore NV 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Commodity Directory
Find actively traded commodities issued by global exchanges
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets