Correlation Between SBM Offshore and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on SBM Offshore and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Litigation Capital.
Diversification Opportunities for SBM Offshore and Litigation Capital
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Litigation is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of SBM Offshore i.e., SBM Offshore and Litigation Capital go up and down completely randomly.
Pair Corralation between SBM Offshore and Litigation Capital
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.54 times more return on investment than Litigation Capital. However, SBM Offshore NV is 1.85 times less risky than Litigation Capital. It trades about -0.34 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.34 per unit of risk. If you would invest 1,779 in SBM Offshore NV on September 20, 2024 and sell it today you would lose (133.00) from holding SBM Offshore NV or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Litigation Capital Management
Performance |
| Timeline |
| SBM Offshore NV |
| Litigation Capital |
SBM Offshore and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Litigation Capital
The main advantage of trading using opposite SBM Offshore and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Blue Star Capital |
| Litigation Capital vs. Southern Copper Corp | Litigation Capital vs. URU Metals | Litigation Capital vs. Panther Metals PLC | Litigation Capital vs. Wheaton Precious 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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