Correlation Between SBM Offshore and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on SBM Offshore and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and CNH Industrial.
Diversification Opportunities for SBM Offshore and CNH Industrial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and CNH is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of SBM Offshore i.e., SBM Offshore and CNH Industrial go up and down completely randomly.
Pair Corralation between SBM Offshore and CNH Industrial
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.84 times more return on investment than CNH Industrial. However, SBM Offshore NV is 1.19 times less risky than CNH Industrial. It trades about 0.04 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.02 per unit of risk. If you would invest 1,366 in SBM Offshore NV on August 26, 2024 and sell it today you would earn a total of 412.00 from holding SBM Offshore NV or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. CNH Industrial NV
Performance |
| Timeline |
| SBM Offshore NV |
| CNH Industrial NV |
SBM Offshore and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and CNH Industrial
The main advantage of trading using opposite SBM Offshore and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| SBM Offshore vs. Semperit Aktiengesellschaft Holding | SBM Offshore vs. Oesterr Post AG | SBM Offshore vs. Voestalpine AG | SBM Offshore vs. Universal Music Group |
| CNH Industrial vs. RATH Aktiengesellschaft | CNH Industrial vs. AT S Austria | CNH Industrial vs. BAWAG Group AG | CNH Industrial vs. Semperit Aktiengesellschaft Holding |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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