Correlation Between SBM OFFSHORE and CAREER EDUCATION
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and CAREER EDUCATION 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 CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and CAREER EDUCATION, you can compare the effects of market volatilities on SBM OFFSHORE and CAREER EDUCATION 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 CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and CAREER EDUCATION.
Diversification Opportunities for SBM OFFSHORE and CAREER EDUCATION
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and CAREER is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and CAREER EDUCATION go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and CAREER EDUCATION
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 11.98 times less return on investment than CAREER EDUCATION. But when comparing it to its historical volatility, SBM OFFSHORE is 1.94 times less risky than CAREER EDUCATION. It trades about 0.05 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,060 in CAREER EDUCATION on September 2, 2024 and sell it today you would earn a total of 540.00 from holding CAREER EDUCATION or generate 26.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. CAREER EDUCATION
Performance |
| Timeline |
| SBM OFFSHORE |
| CAREER EDUCATION |
SBM OFFSHORE and CAREER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and CAREER EDUCATION
The main advantage of trading using opposite SBM OFFSHORE and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, CAREER EDUCATION 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.| SBM OFFSHORE vs. Federal Agricultural Mortgage | SBM OFFSHORE vs. Corporate Office Properties | SBM OFFSHORE vs. Infrastrutture Wireless Italiane | SBM OFFSHORE vs. AUST AGRICULTURAL |
| CAREER EDUCATION vs. Penn National Gaming | CAREER EDUCATION vs. Norwegian Air Shuttle | CAREER EDUCATION vs. UNIVMUSIC GRPADR050 | CAREER EDUCATION vs. GAMING FAC SA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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