Correlation Between SBM Offshore and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Fair Oaks 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 Fair Oaks 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 Fair Oaks Income, you can compare the effects of market volatilities on SBM Offshore and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Fair Oaks.
Diversification Opportunities for SBM Offshore and Fair Oaks
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and Fair is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of SBM Offshore i.e., SBM Offshore and Fair Oaks go up and down completely randomly.
Pair Corralation between SBM Offshore and Fair Oaks
Assuming the 90 days trading horizon SBM Offshore NV is expected to under-perform the Fair Oaks. In addition to that, SBM Offshore is 1.31 times more volatile than Fair Oaks Income. It trades about -0.34 of its total potential returns per unit of risk. Fair Oaks Income is currently generating about 0.21 per unit of volatility. If you would invest 55.00 in Fair Oaks Income on September 20, 2024 and sell it today you would earn a total of 2.00 from holding Fair Oaks Income or generate 3.64% 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. Fair Oaks Income
Performance |
| Timeline |
| SBM Offshore NV |
| Fair Oaks Income |
SBM Offshore and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Fair Oaks
The main advantage of trading using opposite SBM Offshore and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Blue Star Capital |
| Fair Oaks vs. Infrastrutture Wireless Italiane | Fair Oaks vs. Take Two Interactive Software | Fair Oaks vs. Vitec Software Group | Fair Oaks vs. Extra Space Storage |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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