Correlation Between SBM Offshore and Trellus Health
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on SBM Offshore and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Trellus Health.
Diversification Opportunities for SBM Offshore and Trellus Health
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Trellus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of SBM Offshore i.e., SBM Offshore and Trellus Health go up and down completely randomly.
Pair Corralation between SBM Offshore and Trellus Health
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.22 times more return on investment than Trellus Health. However, SBM Offshore is 1.22 times more volatile than Trellus Health plc. It trades about 0.06 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.18 per unit of risk. If you would invest 1,676 in SBM Offshore NV on August 31, 2024 and sell it today you would earn a total of 37.00 from holding SBM Offshore NV or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Trellus Health plc
Performance |
| Timeline |
| SBM Offshore NV |
| Trellus Health plc |
SBM Offshore and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Trellus Health
The main advantage of trading using opposite SBM Offshore and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| SBM Offshore vs. AcadeMedia AB | SBM Offshore vs. Zinc Media Group | SBM Offshore vs. Auction Technology Group | SBM Offshore vs. Hollywood Bowl Group |
| Trellus Health vs. Toyota Motor Corp | Trellus Health vs. SoftBank Group Corp | Trellus Health vs. State Bank of | Trellus Health vs. MOL Hungarian Oil |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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