Correlation Between SBM Offshore and Home Depot
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Home Depot 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 Home Depot 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 Home Depot, you can compare the effects of market volatilities on SBM Offshore and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Home Depot.
Diversification Opportunities for SBM Offshore and Home Depot
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBM and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of SBM Offshore i.e., SBM Offshore and Home Depot go up and down completely randomly.
Pair Corralation between SBM Offshore and Home Depot
If you would invest 1,654 in SBM Offshore NV on August 27, 2024 and sell it today you would earn a total of 106.00 from holding SBM Offshore NV or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Home Depot
Performance |
| Timeline |
| SBM Offshore NV |
| Home Depot |
SBM Offshore and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Home Depot
The main advantage of trading using opposite SBM Offshore and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Diversified Energy |
| Home Depot vs. Walmart | Home Depot vs. Volkswagen AG | Home Depot vs. Volkswagen AG Non Vtg | Home Depot vs. Compass Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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