Correlation Between SBM Offshore and Axfood AB
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on SBM Offshore and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Axfood AB.
Diversification Opportunities for SBM Offshore and Axfood AB
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and Axfood is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of SBM Offshore i.e., SBM Offshore and Axfood AB go up and down completely randomly.
Pair Corralation between SBM Offshore and Axfood AB
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.02 times more return on investment than Axfood AB. However, SBM Offshore is 1.02 times more volatile than Axfood AB. It trades about 0.14 of its potential returns per unit of risk. Axfood AB is currently generating about 0.04 per unit of risk. If you would invest 1,717 in SBM Offshore NV on November 4, 2024 and sell it today you would earn a total of 71.00 from holding SBM Offshore NV or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
SBM Offshore NV vs. Axfood AB
Performance |
| Timeline |
| SBM Offshore NV |
| Axfood AB |
SBM Offshore and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Axfood AB
The main advantage of trading using opposite SBM Offshore and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| SBM Offshore vs. Gamma Communications PLC | SBM Offshore vs. Universal Music Group | SBM Offshore vs. Clean Power Hydrogen | SBM Offshore vs. Aeorema Communications Plc |
| Axfood AB vs. Golden Metal Resources | Axfood AB vs. Host Hotels Resorts | Axfood AB vs. Endeavour Mining Corp | Axfood AB vs. Atalaya Mining |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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