Correlation Between SBM Offshore and Park Hotels
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on SBM Offshore and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Park Hotels.
Diversification Opportunities for SBM Offshore and Park Hotels
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Park is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of SBM Offshore i.e., SBM Offshore and Park Hotels go up and down completely randomly.
Pair Corralation between SBM Offshore and Park Hotels
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.11 times more return on investment than Park Hotels. However, SBM Offshore is 1.11 times more volatile than Park Hotels Resorts. It trades about 0.09 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest 1,404 in SBM Offshore NV on September 3, 2024 and sell it today you would earn a total of 311.00 from holding SBM Offshore NV or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.45% |
| Values | Daily Returns |
SBM Offshore NV vs. Park Hotels Resorts
Performance |
| Timeline |
| SBM Offshore NV |
| Park Hotels Resorts |
SBM Offshore and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Park Hotels
The main advantage of trading using opposite SBM Offshore and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Invesco Health Care |
| Park Hotels vs. JD Sports Fashion | Park Hotels vs. Vitec Software Group | Park Hotels vs. Alliance Data Systems | Park Hotels vs. Ion Beam Applications |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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