Correlation Between SBM OFFSHORE and WHIRLPOOL
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and WHIRLPOOL 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 WHIRLPOOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and WHIRLPOOL, you can compare the effects of market volatilities on SBM OFFSHORE and WHIRLPOOL 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 WHIRLPOOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and WHIRLPOOL.
Diversification Opportunities for SBM OFFSHORE and WHIRLPOOL
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SBM and WHIRLPOOL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and WHIRLPOOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHIRLPOOL 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 WHIRLPOOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHIRLPOOL has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and WHIRLPOOL go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and WHIRLPOOL
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 5.94 times less return on investment than WHIRLPOOL. But when comparing it to its historical volatility, SBM OFFSHORE is 1.01 times less risky than WHIRLPOOL. It trades about 0.05 of its potential returns per unit of risk. WHIRLPOOL is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,368 in WHIRLPOOL on September 2, 2024 and sell it today you would earn a total of 1,182 from holding WHIRLPOOL or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. WHIRLPOOL
Performance |
| Timeline |
| SBM OFFSHORE |
| WHIRLPOOL |
SBM OFFSHORE and WHIRLPOOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and WHIRLPOOL
The main advantage of trading using opposite SBM OFFSHORE and WHIRLPOOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, WHIRLPOOL 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 WHIRLPOOL will offset losses from the drop in WHIRLPOOL's long position.| SBM OFFSHORE vs. Federal Agricultural Mortgage | SBM OFFSHORE vs. Corporate Office Properties | SBM OFFSHORE vs. Infrastrutture Wireless Italiane | SBM OFFSHORE vs. AUST AGRICULTURAL |
| WHIRLPOOL vs. Perseus Mining Limited | WHIRLPOOL vs. Q2M Managementberatung AG | WHIRLPOOL vs. SBM OFFSHORE | WHIRLPOOL vs. Jupiter Fund Management |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |