Correlation Between SBM Offshore and United Utilities
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on SBM Offshore and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and United Utilities.
Diversification Opportunities for SBM Offshore and United Utilities
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBM and United is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of SBM Offshore i.e., SBM Offshore and United Utilities go up and down completely randomly.
Pair Corralation between SBM Offshore and United Utilities
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.35 times more return on investment than United Utilities. However, SBM Offshore is 1.35 times more volatile than United Utilities Group. It trades about 0.09 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.08 per unit of risk. If you would invest 1,404 in SBM Offshore NV on September 3, 2024 and sell it today you would earn a total of 311.00 from holding SBM Offshore NV or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
SBM Offshore NV vs. United Utilities Group
Performance |
| Timeline |
| SBM Offshore NV |
| United Utilities |
SBM Offshore and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and United Utilities
The main advantage of trading using opposite SBM Offshore and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Invesco Health Care |
| United Utilities vs. Hyundai Motor | United Utilities vs. Toyota Motor Corp | United Utilities vs. SoftBank Group Corp | United Utilities vs. Halyk Bank of |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |