Correlation Between SBM Offshore and Liontrust Asset
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Liontrust Asset 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 Liontrust Asset 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 Liontrust Asset Management, you can compare the effects of market volatilities on SBM Offshore and Liontrust Asset 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 Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Liontrust Asset.
Diversification Opportunities for SBM Offshore and Liontrust Asset
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Liontrust is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana 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 Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of SBM Offshore i.e., SBM Offshore and Liontrust Asset go up and down completely randomly.
Pair Corralation between SBM Offshore and Liontrust Asset
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.66 times more return on investment than Liontrust Asset. However, SBM Offshore NV is 1.52 times less risky than Liontrust Asset. It trades about 0.02 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.18 per unit of risk. If you would invest 1,695 in SBM Offshore NV on September 2, 2024 and sell it today you would earn a total of 20.00 from holding SBM Offshore NV or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
SBM Offshore NV vs. Liontrust Asset Management
Performance |
| Timeline |
| SBM Offshore NV |
| Liontrust Asset Mana |
SBM Offshore and Liontrust Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Liontrust Asset
The main advantage of trading using opposite SBM Offshore and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Liontrust Asset 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 Liontrust Asset will offset losses from the drop in Liontrust Asset's long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Diversified Energy |
| Liontrust Asset vs. Liberty Media Corp | Liontrust Asset vs. Cars Inc | Liontrust Asset vs. Universal Display Corp | Liontrust Asset vs. Flutter Entertainment PLC |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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