Correlation Between FC Investment and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both FC Investment 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 FC Investment and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and SBM Offshore NV, you can compare the effects of market volatilities on FC Investment 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 FC Investment with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and SBM Offshore.
Diversification Opportunities for FC Investment and SBM Offshore
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FCIT and SBM is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust 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 FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and SBM Offshore go up and down completely randomly.
Pair Corralation between FC Investment and SBM Offshore
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.45 times more return on investment than SBM Offshore. However, FC Investment Trust is 2.24 times less risky than SBM Offshore. It trades about 0.27 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.09 per unit of risk. If you would invest 105,456 in FC Investment Trust on October 25, 2024 and sell it today you would earn a total of 13,744 from holding FC Investment Trust or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. SBM Offshore NV
Performance |
| Timeline |
| FC Investment Trust |
| SBM Offshore NV |
FC Investment and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and SBM Offshore
The main advantage of trading using opposite FC Investment and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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.| FC Investment vs. Associated British Foods | FC Investment vs. Jacquet Metal Service | FC Investment vs. Beowulf Mining | FC Investment vs. First Class Metals |
| SBM Offshore vs. FC Investment Trust | SBM Offshore vs. Wyndham Hotels Resorts | SBM Offshore vs. Westlake Chemical Corp | SBM Offshore vs. Melia Hotels |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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