Correlation Between Sensient Technologies and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and SBM Offshore NV, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and SBM Offshore.
Diversification Opportunities for Sensient Technologies and SBM Offshore
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sensient and SBM is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and SBM Offshore go up and down completely randomly.
Pair Corralation between Sensient Technologies and SBM Offshore
Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the SBM Offshore. In addition to that, Sensient Technologies is 2.34 times more volatile than SBM Offshore NV. It trades about -0.01 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.14 per unit of volatility. If you would invest 1,836 in SBM Offshore NV on August 29, 2024 and sell it today you would earn a total of 44.00 from holding SBM Offshore NV or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sensient Technologies vs. SBM Offshore NV
Performance |
| Timeline |
| Sensient Technologies |
| SBM Offshore NV |
Sensient Technologies and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and SBM Offshore
The main advantage of trading using opposite Sensient Technologies and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.| Sensient Technologies vs. Direxion Daily FTSE | Sensient Technologies vs. Collegium Pharmaceutical | Sensient Technologies vs. KKR Co LP | Sensient Technologies vs. iShares Dividend and |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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