Correlation Between SeaBird Exploration and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SeaBird Exploration and Dow Jones 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 SeaBird Exploration and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SeaBird Exploration Plc and Dow Jones Industrial, you can compare the effects of market volatilities on SeaBird Exploration and Dow Jones 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 SeaBird Exploration with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and Dow Jones.
Diversification Opportunities for SeaBird Exploration and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SeaBird and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and SeaBird Exploration 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 SeaBird Exploration Plc are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of SeaBird Exploration i.e., SeaBird Exploration and Dow Jones go up and down completely randomly.
Pair Corralation between SeaBird Exploration and Dow Jones
Assuming the 90 days trading horizon SeaBird Exploration Plc is expected to generate 1.46 times more return on investment than Dow Jones. However, SeaBird Exploration is 1.46 times more volatile than Dow Jones Industrial. It trades about 0.38 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 per unit of risk. If you would invest 505.00 in SeaBird Exploration Plc on August 31, 2024 and sell it today you would earn a total of 64.00 from holding SeaBird Exploration Plc or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SeaBird Exploration Plc vs. Dow Jones Industrial
Performance |
| Timeline |
SeaBird Exploration and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SeaBird Exploration Plc
Pair trading matchups for SeaBird Exploration
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SeaBird Exploration and Dow Jones
The main advantage of trading using opposite SeaBird Exploration and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeaBird Exploration position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| SeaBird Exploration vs. Aker ASA | SeaBird Exploration vs. Subsea 7 SA | SeaBird Exploration vs. Aker Solutions ASA | SeaBird Exploration vs. TGS NOPEC Geophysical |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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