Correlation Between Seadrill and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Seadrill and SBM Offshore 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 Seadrill and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and SBM Offshore NV, you can compare the effects of market volatilities on Seadrill and SBM Offshore 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 Seadrill with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and SBM Offshore.
Diversification Opportunities for Seadrill and SBM Offshore
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seadrill and SBM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Seadrill 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 Seadrill Limited are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Seadrill i.e., Seadrill and SBM Offshore go up and down completely randomly.
Pair Corralation between Seadrill and SBM Offshore
Given the investment horizon of 90 days Seadrill Limited is expected to under-perform the SBM Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Seadrill Limited is 1.01 times less risky than SBM Offshore. The stock trades about 0.0 of its potential returns per unit of risk. The SBM Offshore NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,211 in SBM Offshore NV on August 26, 2024 and sell it today you would earn a total of 669.00 from holding SBM Offshore NV or generate 55.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.5% |
| Values | Daily Returns |
Seadrill Limited vs. SBM Offshore NV
Performance |
| Timeline |
| Seadrill Limited |
| SBM Offshore NV |
Seadrill and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and SBM Offshore
The main advantage of trading using opposite Seadrill and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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