Correlation Between Sable Offshore and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Adient PLC 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 Sable Offshore and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and Adient PLC, you can compare the effects of market volatilities on Sable Offshore and Adient PLC 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 Sable Offshore with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Adient PLC.
Diversification Opportunities for Sable Offshore and Adient PLC
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sable and Adient is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Sable 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 Sable Offshore Corp are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Sable Offshore i.e., Sable Offshore and Adient PLC go up and down completely randomly.
Pair Corralation between Sable Offshore and Adient PLC
Considering the 90-day investment horizon Sable Offshore Corp is expected to under-perform the Adient PLC. In addition to that, Sable Offshore is 1.52 times more volatile than Adient PLC. It trades about -0.07 of its total potential returns per unit of risk. Adient PLC is currently generating about 0.03 per unit of volatility. If you would invest 1,974 in Adient PLC on September 5, 2024 and sell it today you would earn a total of 16.00 from holding Adient PLC or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sable Offshore Corp vs. Adient PLC
Performance |
| Timeline |
| Sable Offshore Corp |
| Adient PLC |
Sable Offshore and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Adient PLC
The main advantage of trading using opposite Sable Offshore and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Sable Offshore vs. Helmerich and Payne | Sable Offshore vs. Noble plc | Sable Offshore vs. Nabors Industries | Sable Offshore vs. Precision Drilling |
| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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