Correlation Between SBM OFFSHORE and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Treasury Wine Estates, you can compare the effects of market volatilities on SBM OFFSHORE and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Treasury Wine.
Diversification Opportunities for SBM OFFSHORE and Treasury Wine
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Treasury is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Treasury Wine go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Treasury Wine
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.96 times more return on investment than Treasury Wine. However, SBM OFFSHORE is 1.04 times less risky than Treasury Wine. It trades about 0.02 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.3 per unit of risk. If you would invest 1,703 in SBM OFFSHORE on October 12, 2024 and sell it today you would earn a total of 6.00 from holding SBM OFFSHORE or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Treasury Wine Estates
Performance |
| Timeline |
| SBM OFFSHORE |
| Treasury Wine Estates |
SBM OFFSHORE and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Treasury Wine
The main advantage of trading using opposite SBM OFFSHORE and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE vs. CARDINAL HEALTH |
| Treasury Wine vs. SAN MIGUEL BREWERY | Treasury Wine vs. Safety Insurance Group | Treasury Wine vs. ANGLO ASIAN MINING | Treasury Wine vs. Monster Beverage Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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