Correlation Between SBM OFFSHORE and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and InPlay Oil 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 SBM OFFSHORE and InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and InPlay Oil Corp, you can compare the effects of market volatilities on SBM OFFSHORE and InPlay Oil 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 SBM OFFSHORE with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and InPlay Oil.
Diversification Opportunities for SBM OFFSHORE and InPlay Oil
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and InPlay is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and SBM 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 SBM OFFSHORE are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and InPlay Oil go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and InPlay Oil
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.54 times more return on investment than InPlay Oil. However, SBM OFFSHORE is 1.84 times less risky than InPlay Oil. It trades about 0.0 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 1,717 in SBM OFFSHORE on October 15, 2024 and sell it today you would lose (5.00) from holding SBM OFFSHORE or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. InPlay Oil Corp
Performance |
| Timeline |
| SBM OFFSHORE |
| InPlay Oil Corp |
SBM OFFSHORE and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and InPlay Oil
The main advantage of trading using opposite SBM OFFSHORE and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| SBM OFFSHORE vs. Retail Estates NV | SBM OFFSHORE vs. DeVry Education Group | SBM OFFSHORE vs. BJs Wholesale Club | SBM OFFSHORE vs. COSTCO WHOLESALE CDR |
| InPlay Oil vs. UNIQA INSURANCE GR | InPlay Oil vs. GRIFFIN MINING LTD | InPlay Oil vs. Cincinnati Financial Corp | InPlay Oil vs. SUN LIFE FINANCIAL |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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