Correlation Between SBM Offshore and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Aberdeen Diversified 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 Aberdeen Diversified 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 Aberdeen Diversified Income, you can compare the effects of market volatilities on SBM Offshore and Aberdeen Diversified 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 Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Aberdeen Diversified.
Diversification Opportunities for SBM Offshore and Aberdeen Diversified
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBM and Aberdeen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified 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 Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of SBM Offshore i.e., SBM Offshore and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between SBM Offshore and Aberdeen Diversified
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.49 times more return on investment than Aberdeen Diversified. However, SBM Offshore is 1.49 times more volatile than Aberdeen Diversified Income. It trades about 0.27 of its potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.3 per unit of risk. If you would invest 1,645 in SBM Offshore NV on October 20, 2024 and sell it today you would earn a total of 146.00 from holding SBM Offshore NV or generate 8.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Aberdeen Diversified Income
Performance |
| Timeline |
| SBM Offshore NV |
| Aberdeen Diversified |
SBM Offshore and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Aberdeen Diversified
The main advantage of trading using opposite SBM Offshore and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Aberdeen Diversified 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 Aberdeen Diversified will offset losses from the drop in Aberdeen Diversified's long position.| SBM Offshore vs. Ecclesiastical Insurance Office | SBM Offshore vs. Blackrock World Mining | SBM Offshore vs. Bisichi Mining PLC | SBM Offshore vs. Gear4music Plc |
| Aberdeen Diversified vs. Games Workshop Group | Aberdeen Diversified vs. Ross Stores | Aberdeen Diversified vs. Martin Marietta Materials | Aberdeen Diversified vs. SBM Offshore NV |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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