Correlation Between SBM Offshore and Digital Realty
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on SBM Offshore and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Digital Realty.
Diversification Opportunities for SBM Offshore and Digital Realty
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Digital is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of SBM Offshore i.e., SBM Offshore and Digital Realty go up and down completely randomly.
Pair Corralation between SBM Offshore and Digital Realty
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.17 times more return on investment than Digital Realty. However, SBM Offshore is 1.17 times more volatile than Digital Realty Trust. It trades about 0.16 of its potential returns per unit of risk. Digital Realty Trust is currently generating about -0.12 per unit of risk. If you would invest 1,692 in SBM Offshore NV on November 30, 2024 and sell it today you would earn a total of 308.00 from holding SBM Offshore NV or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Digital Realty Trust
Performance |
| Timeline |
| SBM Offshore NV |
| Digital Realty Trust |
SBM Offshore and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Digital Realty
The main advantage of trading using opposite SBM Offshore and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. EVS Broadcast Equipment | SBM Offshore vs. Gaztransport et Technigaz | SBM Offshore vs. JD Sports Fashion |
| Digital Realty vs. Infineon Technologies AG | Digital Realty vs. Roper Technologies | Digital Realty vs. Raytheon Technologies Corp | Digital Realty vs. Supermarket Income REIT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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