Correlation Between SBM Offshore and Marine Products
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Marine Products 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 Marine Products 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 Marine Products, you can compare the effects of market volatilities on SBM Offshore and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Marine Products.
Diversification Opportunities for SBM Offshore and Marine Products
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Marine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of SBM Offshore i.e., SBM Offshore and Marine Products go up and down completely randomly.
Pair Corralation between SBM Offshore and Marine Products
Assuming the 90 days horizon SBM Offshore NV is expected to generate 0.81 times more return on investment than Marine Products. However, SBM Offshore NV is 1.23 times less risky than Marine Products. It trades about 0.08 of its potential returns per unit of risk. Marine Products is currently generating about 0.01 per unit of risk. If you would invest 1,607 in SBM Offshore NV on September 1, 2024 and sell it today you would earn a total of 273.00 from holding SBM Offshore NV or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Marine Products
Performance |
| Timeline |
| SBM Offshore NV |
| Marine Products |
SBM Offshore and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Marine Products
The main advantage of trading using opposite SBM Offshore and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Marine Products vs. LCI Industries | Marine Products vs. MCBC Holdings | Marine Products vs. Winnebago Industries | Marine Products vs. Thor Industries |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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