Correlation Between SBM Offshore and Old Republic
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on SBM Offshore and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Old Republic.
Diversification Opportunities for SBM Offshore and Old Republic
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Old is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of SBM Offshore i.e., SBM Offshore and Old Republic go up and down completely randomly.
Pair Corralation between SBM Offshore and Old Republic
Assuming the 90 days horizon SBM Offshore is expected to generate 2.09 times less return on investment than Old Republic. In addition to that, SBM Offshore is 1.31 times more volatile than Old Republic International. It trades about 0.07 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.19 per unit of volatility. If you would invest 3,533 in Old Republic International on September 3, 2024 and sell it today you would earn a total of 364.00 from holding Old Republic International or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Old Republic International
Performance |
| Timeline |
| SBM Offshore NV |
| Old Republic Interna |
SBM Offshore and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Old Republic
The main advantage of trading using opposite SBM Offshore and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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