Correlation Between GOODYEAR T and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T 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 GOODYEAR T and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and SBM OFFSHORE, you can compare the effects of market volatilities on GOODYEAR T 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 GOODYEAR T with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and SBM OFFSHORE.
Diversification Opportunities for GOODYEAR T and SBM OFFSHORE
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GOODYEAR and SBM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and GOODYEAR T 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 GOODYEAR T RUBBER 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 has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between GOODYEAR T and SBM OFFSHORE
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to generate 1.95 times more return on investment than SBM OFFSHORE. However, GOODYEAR T is 1.95 times more volatile than SBM OFFSHORE. It trades about 0.05 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.06 per unit of risk. If you would invest 883.00 in GOODYEAR T RUBBER on October 19, 2024 and sell it today you would earn a total of 42.00 from holding GOODYEAR T RUBBER or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. SBM OFFSHORE
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| SBM OFFSHORE |
GOODYEAR T and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and SBM OFFSHORE
The main advantage of trading using opposite GOODYEAR T and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T 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.| GOODYEAR T vs. DATATEC LTD 2 | GOODYEAR T vs. MICRONIC MYDATA | GOODYEAR T vs. Live Nation Entertainment | GOODYEAR T vs. Dave Busters Entertainment |
| SBM OFFSHORE vs. Summit Materials | SBM OFFSHORE vs. Diamyd Medical AB | SBM OFFSHORE vs. GOODYEAR T RUBBER | SBM OFFSHORE vs. Merit Medical Systems |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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