Correlation Between Canadian General and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Canadian General 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 Canadian General and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and SBM Offshore NV, you can compare the effects of market volatilities on Canadian General 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 Canadian General with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and SBM Offshore.
Diversification Opportunities for Canadian General and SBM Offshore
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and SBM is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments 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 Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and SBM Offshore go up and down completely randomly.
Pair Corralation between Canadian General and SBM Offshore
Assuming the 90 days trading horizon Canadian General is expected to generate 1.17 times less return on investment than SBM Offshore. In addition to that, Canadian General is 1.29 times more volatile than SBM Offshore NV. It trades about 0.08 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.12 per unit of volatility. If you would invest 1,727 in SBM Offshore NV on November 5, 2024 and sell it today you would earn a total of 61.00 from holding SBM Offshore NV or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Canadian General Investments vs. SBM Offshore NV
Performance |
| Timeline |
| Canadian General Inv |
| SBM Offshore NV |
Canadian General and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and SBM Offshore
The main advantage of trading using opposite Canadian General and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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.| Canadian General vs. Spotify Technology SA | Canadian General vs. Monster Beverage Corp | Canadian General vs. Ebro Foods | Canadian General vs. National Beverage Corp |
| SBM Offshore vs. Wizz Air Holdings | SBM Offshore vs. Air Products Chemicals | SBM Offshore vs. DFS Furniture PLC | SBM Offshore vs. Take Two Interactive Software |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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