Correlation Between SBM OFFSHORE and Metro AG
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Metro AG, you can compare the effects of market volatilities on SBM OFFSHORE and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Metro AG.
Diversification Opportunities for SBM OFFSHORE and Metro AG
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Metro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Metro AG go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Metro AG
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.6 times more return on investment than Metro AG. However, SBM OFFSHORE is 1.66 times less risky than Metro AG. It trades about -0.24 of its potential returns per unit of risk. Metro AG is currently generating about -0.16 per unit of risk. If you would invest 1,771 in SBM OFFSHORE on September 21, 2024 and sell it today you would lose (126.00) from holding SBM OFFSHORE or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Metro AG
Performance |
| Timeline |
| SBM OFFSHORE |
| Metro AG |
SBM OFFSHORE and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Metro AG
The main advantage of trading using opposite SBM OFFSHORE and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| SBM OFFSHORE vs. Astral Foods Limited | SBM OFFSHORE vs. Performance Food Group | SBM OFFSHORE vs. Shenandoah Telecommunications | SBM OFFSHORE vs. INTERSHOP Communications Aktiengesellschaft |
| Metro AG vs. SOFI TECHNOLOGIES | Metro AG vs. MOLSON RS BEVERAGE | Metro AG vs. BOSTON BEER A | Metro AG vs. SBM OFFSHORE |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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