Correlation Between SBM OFFSHORE and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and BURLINGTON STORES 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 BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and BURLINGTON STORES, you can compare the effects of market volatilities on SBM OFFSHORE and BURLINGTON STORES 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 BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and BURLINGTON STORES.
Diversification Opportunities for SBM OFFSHORE and BURLINGTON STORES
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBM and BURLINGTON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES 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 BURLINGTON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BURLINGTON STORES has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and BURLINGTON STORES
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.58 times more return on investment than BURLINGTON STORES. However, SBM OFFSHORE is 1.58 times more volatile than BURLINGTON STORES. It trades about 0.14 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about -0.03 per unit of risk. If you would invest 1,678 in SBM OFFSHORE on October 29, 2024 and sell it today you would earn a total of 77.00 from holding SBM OFFSHORE or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. BURLINGTON STORES
Performance |
| Timeline |
| SBM OFFSHORE |
| BURLINGTON STORES |
SBM OFFSHORE and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and BURLINGTON STORES
The main advantage of trading using opposite SBM OFFSHORE and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, BURLINGTON STORES 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 BURLINGTON STORES will offset losses from the drop in BURLINGTON STORES's long position.| SBM OFFSHORE vs. Fevertree Drinks PLC | SBM OFFSHORE vs. Cal Maine Foods | SBM OFFSHORE vs. National Beverage Corp | SBM OFFSHORE vs. SAN MIGUEL BREWERY |
| BURLINGTON STORES vs. SERI INDUSTRIAL EO | BURLINGTON STORES vs. SBM OFFSHORE | BURLINGTON STORES vs. Jacquet Metal Service | BURLINGTON STORES vs. Thai Beverage Public |
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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