Correlation Between SBM Offshore and Zoom Video
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Zoom Video 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 SBM Offshore and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Zoom Video Communications, you can compare the effects of market volatilities on SBM Offshore and Zoom Video 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 SBM Offshore with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Zoom Video.
Diversification Opportunities for SBM Offshore and Zoom Video
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Zoom is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and SBM 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 SBM Offshore NV are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of SBM Offshore i.e., SBM Offshore and Zoom Video go up and down completely randomly.
Pair Corralation between SBM Offshore and Zoom Video
Assuming the 90 days trading horizon SBM Offshore is expected to generate 5.05 times less return on investment than Zoom Video. But when comparing it to its historical volatility, SBM Offshore NV is 1.41 times less risky than Zoom Video. It trades about 0.06 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,530 in Zoom Video Communications on August 31, 2024 and sell it today you would earn a total of 1,007 from holding Zoom Video Communications or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Zoom Video Communications
Performance |
| Timeline |
| SBM Offshore NV |
| Zoom Video Communications |
SBM Offshore and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Zoom Video
The main advantage of trading using opposite SBM Offshore and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| SBM Offshore vs. AcadeMedia AB | SBM Offshore vs. Zinc Media Group | SBM Offshore vs. Auction Technology Group | SBM Offshore vs. Hollywood Bowl Group |
| Zoom Video vs. Induction Healthcare Group | Zoom Video vs. Target Healthcare REIT | Zoom Video vs. HCA Healthcare | Zoom Video vs. Batm Advanced Communications |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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