Correlation Between Sable Offshore and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Sable Offshore and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Iridium Communications.
Diversification Opportunities for Sable Offshore and Iridium Communications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sable and Iridium is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Sable Offshore i.e., Sable Offshore and Iridium Communications go up and down completely randomly.
Pair Corralation between Sable Offshore and Iridium Communications
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.27 times more return on investment than Iridium Communications. However, Sable Offshore is 1.27 times more volatile than Iridium Communications. It trades about 0.07 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.03 per unit of risk. If you would invest 1,003 in Sable Offshore Corp on September 3, 2024 and sell it today you would earn a total of 1,345 from holding Sable Offshore Corp or generate 134.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.55% |
| Values | Daily Returns |
Sable Offshore Corp vs. Iridium Communications
Performance |
| Timeline |
| Sable Offshore Corp |
| Iridium Communications |
Sable Offshore and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Iridium Communications
The main advantage of trading using opposite Sable Offshore and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Sable Offshore vs. Dine Brands Global | Sable Offshore vs. RCI Hospitality Holdings | Sable Offshore vs. Sweetgreen | Sable Offshore vs. Dennys Corp |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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