Correlation Between American Funds and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both American Funds 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 Funds 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 Funds Fundamental and SBM Offshore NV, you can compare the effects of market volatilities on American Funds 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 Funds with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and SBM Offshore.
Diversification Opportunities for American Funds and SBM Offshore
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and SBM is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental 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 American Funds 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 Funds Fundamental 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 American Funds i.e., American Funds and SBM Offshore go up and down completely randomly.
Pair Corralation between American Funds and SBM Offshore
Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.48 times more return on investment than SBM Offshore. However, American Funds is 1.48 times more volatile than SBM Offshore NV. It trades about 0.2 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.24 per unit of risk. If you would invest 8,194 in American Funds Fundamental on October 24, 2024 and sell it today you would earn a total of 259.00 from holding American Funds Fundamental or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. SBM Offshore NV
Performance |
| Timeline |
| American Funds Funda |
| SBM Offshore NV |
American Funds and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and SBM Offshore
The main advantage of trading using opposite American Funds and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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 Funds vs. Virtus High Yield | American Funds vs. Ab High Income | American Funds vs. Multi Manager High Yield | American Funds vs. Ab High Income |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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