Correlation Between Eidesvik Offshore and SBA Communications
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and SBA Communications 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 Eidesvik Offshore and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eidesvik Offshore ASA and SBA Communications Corp, you can compare the effects of market volatilities on Eidesvik Offshore and SBA Communications 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 Eidesvik Offshore with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and SBA Communications.
Diversification Opportunities for Eidesvik Offshore and SBA Communications
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eidesvik and SBA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp and Eidesvik Offshore 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 Eidesvik Offshore ASA are associated (or correlated) with SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and SBA Communications go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and SBA Communications
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the SBA Communications. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.07 times less risky than SBA Communications. The stock trades about -0.09 of its potential returns per unit of risk. The SBA Communications Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20,980 in SBA Communications Corp on September 1, 2024 and sell it today you would earn a total of 600.00 from holding SBA Communications Corp or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. SBA Communications Corp
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| SBA Communications Corp |
Eidesvik Offshore and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and SBA Communications
The main advantage of trading using opposite Eidesvik Offshore and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, SBA Communications 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 SBA Communications will offset losses from the drop in SBA Communications' long position.| Eidesvik Offshore vs. BURLINGTON STORES | Eidesvik Offshore vs. Burlington Stores | Eidesvik Offshore vs. BJs Wholesale Club | Eidesvik Offshore vs. RETAIL FOOD GROUP |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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