Correlation Between SBM OFFSHORE and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Liberty Broadband 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 Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Liberty Broadband, you can compare the effects of market volatilities on SBM OFFSHORE and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Liberty Broadband.
Diversification Opportunities for SBM OFFSHORE and Liberty Broadband
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Liberty is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Liberty Broadband go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Liberty Broadband
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.78 times more return on investment than Liberty Broadband. However, SBM OFFSHORE is 1.28 times less risky than Liberty Broadband. It trades about 0.02 of its potential returns per unit of risk. Liberty Broadband is currently generating about -0.17 per unit of risk. If you would invest 1,703 in SBM OFFSHORE on October 12, 2024 and sell it today you would earn a total of 6.00 from holding SBM OFFSHORE or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Liberty Broadband
Performance |
| Timeline |
| SBM OFFSHORE |
| Liberty Broadband |
SBM OFFSHORE and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Liberty Broadband
The main advantage of trading using opposite SBM OFFSHORE and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE vs. CARDINAL HEALTH |
| Liberty Broadband vs. GREENX METALS LTD | Liberty Broadband vs. JD SPORTS FASH | Liberty Broadband vs. Charter Communications | Liberty Broadband vs. TELECOM ITALIA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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