Correlation Between SBM Offshore and Primoris Services
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Primoris Services 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 Primoris Services 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 Primoris Services, you can compare the effects of market volatilities on SBM Offshore and Primoris Services 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 Primoris Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Primoris Services.
Diversification Opportunities for SBM Offshore and Primoris Services
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBM and Primoris is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services 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 Primoris Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primoris Services has no effect on the direction of SBM Offshore i.e., SBM Offshore and Primoris Services go up and down completely randomly.
Pair Corralation between SBM Offshore and Primoris Services
Assuming the 90 days horizon SBM Offshore is expected to generate 2.48 times less return on investment than Primoris Services. In addition to that, SBM Offshore is 1.08 times more volatile than Primoris Services. It trades about 0.05 of its total potential returns per unit of risk. Primoris Services is currently generating about 0.13 per unit of volatility. If you would invest 3,065 in Primoris Services on September 12, 2024 and sell it today you would earn a total of 4,689 from holding Primoris Services or generate 152.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.08% |
| Values | Daily Returns |
SBM Offshore NV vs. Primoris Services
Performance |
| Timeline |
| SBM Offshore NV |
| Primoris Services |
SBM Offshore and Primoris Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Primoris Services
The main advantage of trading using opposite SBM Offshore and Primoris Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Primoris Services 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 Primoris Services will offset losses from the drop in Primoris Services' long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Primoris Services vs. MYR Group | Primoris Services vs. Granite Construction Incorporated | Primoris Services vs. Matrix Service Co | Primoris Services vs. Api Group Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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