Correlation Between Analog Devices and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and SBM Offshore NV, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and SBM Offshore.
Diversification Opportunities for Analog Devices and SBM Offshore
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Analog and SBM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Analog Devices 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 Analog Devices 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 NV has no effect on the direction of Analog Devices i.e., Analog Devices and SBM Offshore go up and down completely randomly.
Pair Corralation between Analog Devices and SBM Offshore
Considering the 90-day investment horizon Analog Devices is expected to under-perform the SBM Offshore. In addition to that, Analog Devices is 2.28 times more volatile than SBM Offshore NV. It trades about -0.16 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.2 per unit of volatility. If you would invest 1,836 in SBM Offshore NV on August 25, 2024 and sell it today you would earn a total of 64.00 from holding SBM Offshore NV or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. SBM Offshore NV
Performance |
| Timeline |
| Analog Devices |
| SBM Offshore NV |
Analog Devices and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and SBM Offshore
The main advantage of trading using opposite Analog Devices and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. Eshallgo Class A | Analog Devices vs. Amtech Systems | Analog Devices vs. Gold Fields Ltd | Analog Devices vs. Aegean Airlines SA |
| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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