Correlation Between SBM OFFSHORE and Seven West
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Seven West 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 Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Seven West Media, you can compare the effects of market volatilities on SBM OFFSHORE and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Seven West.
Diversification Opportunities for SBM OFFSHORE and Seven West
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Seven is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Seven West go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Seven West
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.6 times more return on investment than Seven West. However, SBM OFFSHORE is 1.66 times less risky than Seven West. It trades about 0.06 of its potential returns per unit of risk. Seven West Media is currently generating about -0.02 per unit of risk. If you would invest 1,660 in SBM OFFSHORE on September 1, 2024 and sell it today you would earn a total of 40.00 from holding SBM OFFSHORE or generate 2.41% 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. Seven West Media
Performance |
| Timeline |
| SBM OFFSHORE |
| Seven West Media |
SBM OFFSHORE and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Seven West
The main advantage of trading using opposite SBM OFFSHORE and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| SBM OFFSHORE vs. SYSTEMAIR AB | SBM OFFSHORE vs. FORWARD AIR P | SBM OFFSHORE vs. Enter Air SA | SBM OFFSHORE vs. DELTA AIR LINES |
| Seven West vs. Live Nation Entertainment | Seven West vs. Fuji Media Holdings | Seven West vs. Rai Way SpA | Seven West vs. Superior Plus 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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