Correlation Between SBM OFFSHORE and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and WT 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 WT 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 WT OFFSHORE, you can compare the effects of market volatilities on SBM OFFSHORE and WT 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and WT OFFSHORE.
Diversification Opportunities for SBM OFFSHORE and WT OFFSHORE
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBM and UWV is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and WT OFFSHORE go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and WT OFFSHORE
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.49 times more return on investment than WT OFFSHORE. However, SBM OFFSHORE is 2.03 times less risky than WT OFFSHORE. It trades about 0.04 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.06 per unit of risk. If you would invest 1,371 in SBM OFFSHORE on August 25, 2024 and sell it today you would earn a total of 429.00 from holding SBM OFFSHORE or generate 31.29% 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. WT OFFSHORE
Performance |
| Timeline |
| SBM OFFSHORE |
| WT OFFSHORE |
SBM OFFSHORE and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and WT OFFSHORE
The main advantage of trading using opposite SBM OFFSHORE and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, WT 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| SBM OFFSHORE vs. Vulcan Materials | SBM OFFSHORE vs. Goodyear Tire Rubber | SBM OFFSHORE vs. Penn National Gaming | SBM OFFSHORE vs. THRACE PLASTICS |
| WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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