Correlation Between SBM OFFSHORE and BlackRock
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and BlackRock 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 BlackRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and BlackRock, you can compare the effects of market volatilities on SBM OFFSHORE and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and BlackRock.
Diversification Opportunities for SBM OFFSHORE and BlackRock
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBM and BlackRock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and BlackRock go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and BlackRock
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.67 times less return on investment than BlackRock. In addition to that, SBM OFFSHORE is 1.2 times more volatile than BlackRock. It trades about 0.04 of its total potential returns per unit of risk. BlackRock is currently generating about 0.07 per unit of volatility. If you would invest 63,535 in BlackRock on September 20, 2024 and sell it today you would earn a total of 33,965 from holding BlackRock or generate 53.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.82% |
| Values | Daily Returns |
SBM OFFSHORE vs. BlackRock
Performance |
| Timeline |
| SBM OFFSHORE |
| BlackRock |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SBM OFFSHORE and BlackRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and BlackRock
The main advantage of trading using opposite SBM OFFSHORE and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, BlackRock 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 BlackRock will offset losses from the drop in BlackRock's long position.| SBM OFFSHORE vs. URBAN OUTFITTERS | SBM OFFSHORE vs. DELTA AIR LINES | SBM OFFSHORE vs. Westinghouse Air Brake | SBM OFFSHORE vs. Pentair plc |
| BlackRock vs. Eidesvik Offshore ASA | BlackRock vs. Waste Management | BlackRock vs. Platinum Investment Management | BlackRock 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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