Correlation Between SBM OFFSHORE and State Street
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and State Street, you can compare the effects of market volatilities on SBM OFFSHORE and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and State Street.
Diversification Opportunities for SBM OFFSHORE and State Street
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and State is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and State Street go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and State Street
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.45 times less return on investment than State Street. In addition to that, SBM OFFSHORE is 1.18 times more volatile than State Street. It trades about 0.06 of its total potential returns per unit of risk. State Street is currently generating about 0.11 per unit of volatility. If you would invest 5,915 in State Street on September 12, 2024 and sell it today you would earn a total of 3,477 from holding State Street or generate 58.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. State Street
Performance |
| Timeline |
| SBM OFFSHORE |
| State Street |
SBM OFFSHORE and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and State Street
The main advantage of trading using opposite SBM OFFSHORE and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
| State Street vs. TAL Education Group | State Street vs. EMBARK EDUCATION LTD | State Street vs. Solstad Offshore ASA | State Street vs. SBM OFFSHORE |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |