Correlation Between Diageo PLC and Sable Offshore
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Sable 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 Diageo PLC and Sable Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Sable Offshore Corp, you can compare the effects of market volatilities on Diageo PLC and Sable 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 Diageo PLC with a short position of Sable Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Sable Offshore.
Diversification Opportunities for Diageo PLC and Sable Offshore
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diageo and Sable is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Diageo PLC i.e., Diageo PLC and Sable Offshore go up and down completely randomly.
Pair Corralation between Diageo PLC and Sable Offshore
Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the Sable Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 1.78 times less risky than Sable Offshore. The stock trades about -0.02 of its potential returns per unit of risk. The Sable Offshore Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,491 in Sable Offshore Corp on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Sable Offshore Corp or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. Sable Offshore Corp
Performance |
| Timeline |
| Diageo PLC ADR |
| Sable Offshore Corp |
Diageo PLC and Sable Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Sable Offshore
The main advantage of trading using opposite Diageo PLC and Sable Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Sable 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 Sable Offshore will offset losses from the drop in Sable Offshore's long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
| Sable Offshore vs. Coupang LLC | Sable Offshore vs. MYT Netherlands Parent | Sable Offshore vs. Old Dominion Freight | Sable Offshore vs. Sphere Entertainment Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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