Correlation Between SBM Offshore and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Grocery Outlet Holding, you can compare the effects of market volatilities on SBM Offshore and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Grocery Outlet.
Diversification Opportunities for SBM Offshore and Grocery Outlet
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBM and Grocery is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 NV are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of SBM Offshore i.e., SBM Offshore and Grocery Outlet go up and down completely randomly.
Pair Corralation between SBM Offshore and Grocery Outlet
Assuming the 90 days horizon SBM Offshore is expected to generate 10.93 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, SBM Offshore NV is 6.9 times less risky than Grocery Outlet. It trades about 0.14 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Grocery Outlet Holding on August 29, 2024 and sell it today you would earn a total of 441.00 from holding Grocery Outlet Holding or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Grocery Outlet Holding
Performance |
| Timeline |
| SBM Offshore NV |
| Grocery Outlet Holding |
SBM Offshore and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Grocery Outlet
The main advantage of trading using opposite SBM Offshore and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Sprouts Farmers Market | Grocery Outlet vs. Albertsons Companies | Grocery Outlet vs. Dingdong ADR |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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