Correlation Between SBM Offshore and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland, you can compare the effects of market volatilities on SBM Offshore and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Bank of Ireland.
Diversification Opportunities for SBM Offshore and Bank of Ireland
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Bank is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of SBM Offshore i.e., SBM Offshore and Bank of Ireland go up and down completely randomly.
Pair Corralation between SBM Offshore and Bank of Ireland
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.02 times more return on investment than Bank of Ireland. However, SBM Offshore is 1.02 times more volatile than Bank of Ireland. It trades about 0.05 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.03 per unit of risk. If you would invest 1,679 in SBM Offshore NV on September 1, 2024 and sell it today you would earn a total of 36.00 from holding SBM Offshore NV or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Bank of Ireland
Performance |
| Timeline |
| SBM Offshore NV |
| Bank of Ireland |
SBM Offshore and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Bank of Ireland
The main advantage of trading using opposite SBM Offshore and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland's long position.| SBM Offshore vs. Bankers Investment Trust | SBM Offshore vs. Elmos Semiconductor SE | SBM Offshore vs. Beeks Trading | SBM Offshore vs. Tatton Asset Management |
| Bank of Ireland vs. SupplyMe Capital PLC | Bank of Ireland vs. Lloyds Banking Group | Bank of Ireland vs. Premier African Minerals | Bank of Ireland vs. SANTANDER UK 8 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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