Correlation Between SBM Offshore and Smurfit WestRock
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Smurfit WestRock 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 Smurfit WestRock 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 Smurfit WestRock plc, you can compare the effects of market volatilities on SBM Offshore and Smurfit WestRock 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 Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Smurfit WestRock.
Diversification Opportunities for SBM Offshore and Smurfit WestRock
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and Smurfit is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Smurfit WestRock plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit WestRock plc 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 Smurfit WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit WestRock plc has no effect on the direction of SBM Offshore i.e., SBM Offshore and Smurfit WestRock go up and down completely randomly.
Pair Corralation between SBM Offshore and Smurfit WestRock
Assuming the 90 days horizon SBM Offshore NV is expected to under-perform the Smurfit WestRock. In addition to that, SBM Offshore is 1.23 times more volatile than Smurfit WestRock plc. It trades about -0.24 of its total potential returns per unit of risk. Smurfit WestRock plc is currently generating about 0.08 per unit of volatility. If you would invest 5,200 in Smurfit WestRock plc on September 12, 2024 and sell it today you would earn a total of 148.00 from holding Smurfit WestRock plc or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SBM Offshore NV vs. Smurfit WestRock plc
Performance |
| Timeline |
| SBM Offshore NV |
| Smurfit WestRock plc |
SBM Offshore and Smurfit WestRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Smurfit WestRock
The main advantage of trading using opposite SBM Offshore and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Smurfit WestRock 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 Smurfit WestRock will offset losses from the drop in Smurfit WestRock's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Smurfit WestRock vs. Fast Retailing Co | Smurfit WestRock vs. Pinterest | Smurfit WestRock vs. Iridium Communications | Smurfit WestRock vs. Pool Corporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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