Correlation Between SBM Offshore and Vastned Retail
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Vastned Retail 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 Vastned Retail 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 Vastned Retail NV, you can compare the effects of market volatilities on SBM Offshore and Vastned Retail 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 Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Vastned Retail.
Diversification Opportunities for SBM Offshore and Vastned Retail
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBM and Vastned is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of SBM Offshore i.e., SBM Offshore and Vastned Retail go up and down completely randomly.
Pair Corralation between SBM Offshore and Vastned Retail
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.37 times more return on investment than Vastned Retail. However, SBM Offshore is 1.37 times more volatile than Vastned Retail NV. It trades about 0.11 of its potential returns per unit of risk. Vastned Retail NV is currently generating about 0.09 per unit of risk. If you would invest 1,246 in SBM Offshore NV on August 27, 2024 and sell it today you would earn a total of 526.00 from holding SBM Offshore NV or generate 42.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Vastned Retail NV
Performance |
| Timeline |
| SBM Offshore NV |
| Vastned Retail NV |
SBM Offshore and Vastned Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Vastned Retail
The main advantage of trading using opposite SBM Offshore and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail'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 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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