Correlation Between SBM Offshore and Sealed Air
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on SBM Offshore and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Sealed Air.
Diversification Opportunities for SBM Offshore and Sealed Air
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBM and Sealed is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of SBM Offshore i.e., SBM Offshore and Sealed Air go up and down completely randomly.
Pair Corralation between SBM Offshore and Sealed Air
Assuming the 90 days horizon SBM Offshore NV is expected to generate 1.02 times more return on investment than Sealed Air. However, SBM Offshore is 1.02 times more volatile than Sealed Air. It trades about 0.08 of its potential returns per unit of risk. Sealed Air is currently generating about -0.02 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Sealed Air
Performance |
| Timeline |
| SBM Offshore NV |
| Sealed Air |
SBM Offshore and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Sealed Air
The main advantage of trading using opposite SBM Offshore and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Sealed Air vs. Packaging Corp of | Sealed Air vs. O I Glass | Sealed Air vs. Silgan Holdings | Sealed Air vs. International Paper |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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