Correlation Between SBM Offshore and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Teradata Corp 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 Teradata Corp 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 Teradata Corp, you can compare the effects of market volatilities on SBM Offshore and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Teradata Corp.
Diversification Opportunities for SBM Offshore and Teradata Corp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and Teradata is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of SBM Offshore i.e., SBM Offshore and Teradata Corp go up and down completely randomly.
Pair Corralation between SBM Offshore and Teradata Corp
Assuming the 90 days trading horizon SBM Offshore NV is expected to under-perform the Teradata Corp. In addition to that, SBM Offshore is 1.49 times more volatile than Teradata Corp. It trades about -0.06 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.35 per unit of volatility. If you would invest 2,981 in Teradata Corp on September 14, 2024 and sell it today you would earn a total of 308.00 from holding Teradata Corp or generate 10.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
SBM Offshore NV vs. Teradata Corp
Performance |
Timeline |
SBM Offshore NV |
Teradata Corp |
SBM Offshore and Teradata Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SBM Offshore and Teradata Corp
The main advantage of trading using opposite SBM Offshore and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.SBM Offshore vs. Made Tech Group | SBM Offshore vs. Roper Technologies | SBM Offshore vs. LPKF Laser Electronics | SBM Offshore vs. Electronic Arts |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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