Correlation Between SBM Offshore and Extra Space
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Extra Space 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 Extra Space 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 Extra Space Storage, you can compare the effects of market volatilities on SBM Offshore and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Extra Space.
Diversification Opportunities for SBM Offshore and Extra Space
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Extra is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of SBM Offshore i.e., SBM Offshore and Extra Space go up and down completely randomly.
Pair Corralation between SBM Offshore and Extra Space
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.07 times more return on investment than Extra Space. However, SBM Offshore is 1.07 times more volatile than Extra Space Storage. It trades about 0.14 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.05 per unit of risk. If you would invest 1,633 in SBM Offshore NV on August 28, 2024 and sell it today you would earn a total of 166.00 from holding SBM Offshore NV or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Extra Space Storage
Performance |
| Timeline |
| SBM Offshore NV |
| Extra Space Storage |
SBM Offshore and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Extra Space
The main advantage of trading using opposite SBM Offshore and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| SBM Offshore vs. PureTech Health plc | SBM Offshore vs. Dolly Varden Silver | SBM Offshore vs. Addtech | SBM Offshore vs. Anglesey Mining |
| Extra Space vs. Bank of Ireland | Extra Space vs. SBM Offshore NV | Extra Space vs. Ameriprise Financial | Extra Space vs. Flutter Entertainment PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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