Correlation Between Iridium Communications and Sable Offshore
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Sable 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 Iridium Communications and Sable Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Sable Offshore Corp, you can compare the effects of market volatilities on Iridium Communications and Sable 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 Iridium Communications with a short position of Sable Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Sable Offshore.
Diversification Opportunities for Iridium Communications and Sable Offshore
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iridium and Sable is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp and Iridium Communications 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 Iridium Communications are associated (or correlated) with Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Iridium Communications i.e., Iridium Communications and Sable Offshore go up and down completely randomly.
Pair Corralation between Iridium Communications and Sable Offshore
Given the investment horizon of 90 days Iridium Communications is expected to under-perform the Sable Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 2.01 times less risky than Sable Offshore. The stock trades about -0.21 of its potential returns per unit of risk. The Sable Offshore Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,263 in Sable Offshore Corp on January 9, 2025 and sell it today you would lose (287.00) from holding Sable Offshore Corp or give up 12.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Sable Offshore Corp
Performance |
| Timeline |
| Iridium Communications |
| Sable Offshore Corp |
Iridium Communications and Sable Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Sable Offshore
The main advantage of trading using opposite Iridium Communications and Sable Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Sable 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 Sable Offshore will offset losses from the drop in Sable Offshore's long position.| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
| Sable Offshore vs. DR Horton | Sable Offshore vs. Valmont Industries | Sable Offshore vs. Snap On | Sable Offshore vs. On Holding |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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