Correlation Between Fair Oaks and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and SBM Offshore NV, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and SBM Offshore.
Diversification Opportunities for Fair Oaks and SBM Offshore
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fair and SBM is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income 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 Fair Oaks 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 Fair Oaks Income 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 Fair Oaks i.e., Fair Oaks and SBM Offshore go up and down completely randomly.
Pair Corralation between Fair Oaks and SBM Offshore
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.77 times more return on investment than SBM Offshore. However, Fair Oaks Income is 1.31 times less risky than SBM Offshore. It trades about 0.21 of its potential returns per unit of risk. SBM Offshore NV is currently generating about -0.34 per unit of risk. If you would invest 55.00 in Fair Oaks Income on September 20, 2024 and sell it today you would earn a total of 2.00 from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Oaks Income vs. SBM Offshore NV
Performance |
| Timeline |
| Fair Oaks Income |
| SBM Offshore NV |
Fair Oaks and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and SBM Offshore
The main advantage of trading using opposite Fair Oaks and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.| Fair Oaks vs. Infrastrutture Wireless Italiane | Fair Oaks vs. Take Two Interactive Software | Fair Oaks vs. Vitec Software Group | Fair Oaks vs. Extra Space Storage |
| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Blue Star Capital |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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