Correlation Between SBM OFFSHORE and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Eidesvik Offshore 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 Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Eidesvik Offshore ASA, you can compare the effects of market volatilities on SBM OFFSHORE and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Eidesvik Offshore.
Diversification Opportunities for SBM OFFSHORE and Eidesvik Offshore
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Eidesvik is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Eidesvik Offshore
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.8 times more return on investment than Eidesvik Offshore. However, SBM OFFSHORE is 1.26 times less risky than Eidesvik Offshore. It trades about 0.13 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.03 per unit of risk. If you would invest 1,691 in SBM OFFSHORE on August 28, 2024 and sell it today you would earn a total of 85.00 from holding SBM OFFSHORE or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| SBM OFFSHORE |
| Eidesvik Offshore ASA |
SBM OFFSHORE and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Eidesvik Offshore
The main advantage of trading using opposite SBM OFFSHORE and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Microsoft | SBM OFFSHORE vs. Microsoft |
| Eidesvik Offshore vs. Jacquet Metal Service | Eidesvik Offshore vs. Summit Hotel Properties | Eidesvik Offshore vs. American Airlines Group | Eidesvik Offshore vs. MIRAMAR HOTEL INV |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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