Correlation Between European Metals and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and SBM Offshore NV, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and SBM Offshore.
Diversification Opportunities for European Metals and SBM Offshore
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between European and SBM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and SBM Offshore go up and down completely randomly.
Pair Corralation between European Metals and SBM Offshore
Assuming the 90 days trading horizon European Metals is expected to generate 1.05 times less return on investment than SBM Offshore. In addition to that, European Metals is 1.98 times more volatile than SBM Offshore NV. It trades about 0.11 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.23 per unit of volatility. If you would invest 1,692 in SBM Offshore NV on October 29, 2024 and sell it today you would earn a total of 133.00 from holding SBM Offshore NV or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
European Metals Holdings vs. SBM Offshore NV
Performance |
| Timeline |
| European Metals Holdings |
| SBM Offshore NV |
European Metals and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and SBM Offshore
The main advantage of trading using opposite European Metals and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. CAP LEASE AVIATION | European Metals vs. Metals Exploration Plc | European Metals vs. Westlake Chemical Corp | European Metals vs. Atalaya Mining |
| SBM Offshore vs. Allianz Technology Trust | SBM Offshore vs. Flow Traders NV | SBM Offshore vs. Sunny Optical Technology | SBM Offshore vs. DXC Technology 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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