Correlation Between SBM Offshore and Fugro NV
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Fugro NV 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 Fugro NV 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 Fugro NV, you can compare the effects of market volatilities on SBM Offshore and Fugro NV 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 Fugro NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Fugro NV.
Diversification Opportunities for SBM Offshore and Fugro NV
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Fugro is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Fugro NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fugro NV 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 Fugro NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fugro NV has no effect on the direction of SBM Offshore i.e., SBM Offshore and Fugro NV go up and down completely randomly.
Pair Corralation between SBM Offshore and Fugro NV
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.36 times more return on investment than Fugro NV. However, SBM Offshore NV is 2.8 times less risky than Fugro NV. It trades about 0.15 of its potential returns per unit of risk. Fugro NV is currently generating about -0.26 per unit of risk. If you would invest 1,675 in SBM Offshore NV on August 28, 2024 and sell it today you would earn a total of 77.00 from holding SBM Offshore NV or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Fugro NV
Performance |
| Timeline |
| SBM Offshore NV |
| Fugro NV |
SBM Offshore and Fugro NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Fugro NV
The main advantage of trading using opposite SBM Offshore and Fugro NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Fugro NV 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 Fugro NV will offset losses from the drop in Fugro NV's long position.| SBM Offshore vs. Koninklijke Vopak NV | SBM Offshore vs. Randstad NV | SBM Offshore vs. Aalberts Industries NV | SBM Offshore vs. iShares SP 500 |
| Fugro NV vs. Aalberts Industries NV | Fugro NV vs. SBM Offshore NV | Fugro NV vs. NN Group NV | Fugro NV vs. Randstad NV |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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