Correlation Between American Public and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both American Public and SBM OFFSHORE 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 American Public and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and SBM OFFSHORE, you can compare the effects of market volatilities on American Public and SBM OFFSHORE 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 American Public with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and SBM OFFSHORE.
Diversification Opportunities for American Public and SBM OFFSHORE
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and SBM is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and American Public 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 American Public Education are associated (or correlated) with SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of American Public i.e., American Public and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between American Public and SBM OFFSHORE
Assuming the 90 days horizon American Public Education is expected to under-perform the SBM OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, American Public Education is 1.01 times less risky than SBM OFFSHORE. The stock trades about -0.06 of its potential returns per unit of risk. The SBM OFFSHORE is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,755 in SBM OFFSHORE on November 28, 2024 and sell it today you would earn a total of 283.00 from holding SBM OFFSHORE or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. SBM OFFSHORE
Performance |
| Timeline |
| American Public Education |
| SBM OFFSHORE |
American Public and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and SBM OFFSHORE
The main advantage of trading using opposite American Public and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| American Public vs. Direct Line Insurance | American Public vs. Japan Post Insurance | American Public vs. ScanSource | American Public vs. Computershare Limited |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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