Correlation Between SBM OFFSHORE and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Veolia Environnement 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 Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Veolia Environnement SA, you can compare the effects of market volatilities on SBM OFFSHORE and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Veolia Environnement.
Diversification Opportunities for SBM OFFSHORE and Veolia Environnement
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Veolia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Veolia Environnement go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Veolia Environnement
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.44 times more return on investment than Veolia Environnement. However, SBM OFFSHORE is 1.44 times more volatile than Veolia Environnement SA. It trades about 0.36 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about 0.13 per unit of risk. If you would invest 1,645 in SBM OFFSHORE on October 20, 2024 and sell it today you would earn a total of 160.00 from holding SBM OFFSHORE or generate 9.73% 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. Veolia Environnement SA
Performance |
| Timeline |
| SBM OFFSHORE |
| Veolia Environnement |
SBM OFFSHORE and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Veolia Environnement
The main advantage of trading using opposite SBM OFFSHORE and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| SBM OFFSHORE vs. BORR DRILLING NEW | SBM OFFSHORE vs. GLG LIFE TECH | SBM OFFSHORE vs. Bio Techne Corp | SBM OFFSHORE vs. Addtech AB |
| Veolia Environnement vs. SPORT LISBOA E | Veolia Environnement vs. FUYO GENERAL LEASE | Veolia Environnement vs. DICKS Sporting Goods | Veolia Environnement vs. TITANIUM TRANSPORTGROUP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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