Correlation Between SBM OFFSHORE and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and STRAYER 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 STRAYER 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 STRAYER EDUCATION, you can compare the effects of market volatilities on SBM OFFSHORE and STRAYER 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and STRAYER EDUCATION.
Diversification Opportunities for SBM OFFSHORE and STRAYER EDUCATION
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and STRAYER is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and STRAYER EDUCATION
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 2.11 times more return on investment than STRAYER EDUCATION. However, SBM OFFSHORE is 2.11 times more volatile than STRAYER EDUCATION. It trades about 0.28 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.11 per unit of risk. If you would invest 1,755 in SBM OFFSHORE on November 28, 2024 and sell it today you would earn a total of 283.00 from holding SBM OFFSHORE or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. STRAYER EDUCATION
Performance |
| Timeline |
| SBM OFFSHORE |
| STRAYER EDUCATION |
SBM OFFSHORE and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and STRAYER EDUCATION
The main advantage of trading using opposite SBM OFFSHORE and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, STRAYER 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| SBM OFFSHORE vs. ECHO INVESTMENT ZY | SBM OFFSHORE vs. Japan Asia Investment | SBM OFFSHORE vs. The Yokohama Rubber | SBM OFFSHORE vs. SANOK RUBBER ZY |
| STRAYER EDUCATION vs. EMBARK EDUCATION LTD | STRAYER EDUCATION vs. OURGAME INTHOLDL 00005 | STRAYER EDUCATION vs. MOVIE GAMES SA | STRAYER EDUCATION vs. GigaMedia |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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