Correlation Between Sable Offshore and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Diageo 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 Diageo 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 Diageo PLC ADR, you can compare the effects of market volatilities on Sable Offshore and Diageo 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Diageo PLC.
Diversification Opportunities for Sable Offshore and Diageo PLC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sable and Diageo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Sable Offshore i.e., Sable Offshore and Diageo PLC go up and down completely randomly.
Pair Corralation between Sable Offshore and Diageo PLC
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.78 times more return on investment than Diageo PLC. However, Sable Offshore is 1.78 times more volatile than Diageo PLC ADR. It trades about 0.02 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.02 per unit of risk. If you would invest 2,491 in Sable Offshore Corp on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Sable Offshore Corp or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sable Offshore Corp vs. Diageo PLC ADR
Performance |
| Timeline |
| Sable Offshore Corp |
| Diageo PLC ADR |
Sable Offshore and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Diageo PLC
The main advantage of trading using opposite Sable Offshore and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, Diageo 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Sable Offshore vs. Coupang LLC | Sable Offshore vs. MYT Netherlands Parent | Sable Offshore vs. Old Dominion Freight | Sable Offshore vs. Sphere Entertainment Co |
| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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