Correlation Between Catalyst Media and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Catalyst Media 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 Catalyst Media and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Media Group and SBM Offshore NV, you can compare the effects of market volatilities on Catalyst Media 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 Catalyst Media with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and SBM Offshore.
Diversification Opportunities for Catalyst Media and SBM Offshore
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catalyst and SBM is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group 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 Catalyst Media 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 Catalyst Media Group 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 Catalyst Media i.e., Catalyst Media and SBM Offshore go up and down completely randomly.
Pair Corralation between Catalyst Media and SBM Offshore
Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the SBM Offshore. In addition to that, Catalyst Media is 1.3 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 0.15 per unit of volatility. If you would invest 1,654 in SBM Offshore NV on August 27, 2024 and sell it today you would earn a total of 106.00 from holding SBM Offshore NV or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. SBM Offshore NV
Performance |
| Timeline |
| Catalyst Media Group |
| SBM Offshore NV |
Catalyst Media and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and SBM Offshore
The main advantage of trading using opposite Catalyst Media and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media 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.| Catalyst Media vs. Toyota Motor Corp | Catalyst Media vs. SoftBank Group Corp | Catalyst Media vs. Fannie Mae | Catalyst Media vs. State Bank of |
| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Diversified Energy |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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