Correlation Between SBM Offshore and IShares Physical
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and IShares Physical 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 IShares Physical 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 iShares Physical Silver, you can compare the effects of market volatilities on SBM Offshore and IShares Physical 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 IShares Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and IShares Physical.
Diversification Opportunities for SBM Offshore and IShares Physical
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and IShares is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver 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 IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of SBM Offshore i.e., SBM Offshore and IShares Physical go up and down completely randomly.
Pair Corralation between SBM Offshore and IShares Physical
Assuming the 90 days trading horizon SBM Offshore NV is expected to under-perform the IShares Physical. In addition to that, SBM Offshore is 1.32 times more volatile than iShares Physical Silver. It trades about -0.06 of its total potential returns per unit of risk. iShares Physical Silver is currently generating about 0.04 per unit of volatility. If you would invest 2,922 in iShares Physical Silver on September 14, 2024 and sell it today you would earn a total of 35.00 from holding iShares Physical Silver or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. iShares Physical Silver
Performance |
| Timeline |
| SBM Offshore NV |
| iShares Physical Silver |
SBM Offshore and IShares Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and IShares Physical
The main advantage of trading using opposite SBM Offshore and IShares Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, IShares Physical 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 IShares Physical will offset losses from the drop in IShares Physical's long position.| SBM Offshore vs. Made Tech Group | SBM Offshore vs. Roper Technologies | SBM Offshore vs. LPKF Laser Electronics | SBM Offshore vs. Electronic Arts |
| IShares Physical vs. Microchip Technology | IShares Physical vs. European Metals Holdings | IShares Physical vs. Cornish Metals | IShares Physical vs. GreenX 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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