Correlation Between SBM Offshore and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies Corp, you can compare the effects of market volatilities on SBM Offshore and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Raytheon Technologies.
Diversification Opportunities for SBM Offshore and Raytheon Technologies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Raytheon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of SBM Offshore i.e., SBM Offshore and Raytheon Technologies go up and down completely randomly.
Pair Corralation between SBM Offshore and Raytheon Technologies
Assuming the 90 days trading horizon SBM Offshore is expected to generate 2.64 times less return on investment than Raytheon Technologies. In addition to that, SBM Offshore is 1.5 times more volatile than Raytheon Technologies Corp. It trades about 0.1 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.38 per unit of volatility. If you would invest 11,629 in Raytheon Technologies Corp on November 2, 2024 and sell it today you would earn a total of 1,063 from holding Raytheon Technologies Corp or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SBM Offshore NV vs. Raytheon Technologies Corp
Performance |
| Timeline |
| SBM Offshore NV |
| Raytheon Technologies |
SBM Offshore and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Raytheon Technologies
The main advantage of trading using opposite SBM Offshore and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| SBM Offshore vs. Ecclesiastical Insurance Office | SBM Offshore vs. bet at home AG | SBM Offshore vs. Silver Bullet Data | SBM Offshore vs. Anglo Asian Mining |
| Raytheon Technologies vs. Capital Metals PLC | Raytheon Technologies vs. Power Metal Resources | Raytheon Technologies vs. Premier Foods PLC | Raytheon Technologies vs. Cornish Metals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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