Correlation Between Solstad Offshore and State Street
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and State Street 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 Solstad Offshore and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and State Street, you can compare the effects of market volatilities on Solstad Offshore and State Street 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 Solstad Offshore with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and State Street.
Diversification Opportunities for Solstad Offshore and State Street
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solstad and State is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street and Solstad 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 Solstad Offshore ASA are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and State Street go up and down completely randomly.
Pair Corralation between Solstad Offshore and State Street
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 2.77 times more return on investment than State Street. However, Solstad Offshore is 2.77 times more volatile than State Street. It trades about 0.06 of its potential returns per unit of risk. State Street is currently generating about 0.11 per unit of risk. If you would invest 186.00 in Solstad Offshore ASA on September 12, 2024 and sell it today you would earn a total of 141.00 from holding Solstad Offshore ASA or generate 75.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. State Street
Performance |
| Timeline |
| Solstad Offshore ASA |
| State Street |
Solstad Offshore and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and State Street
The main advantage of trading using opposite Solstad Offshore and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Solstad Offshore vs. Columbia Sportswear | Solstad Offshore vs. PARKEN Sport Entertainment | Solstad Offshore vs. Sunny Optical Technology | Solstad Offshore vs. Micron Technology |
| State Street vs. TAL Education Group | State Street vs. EMBARK EDUCATION LTD | State Street vs. Solstad Offshore ASA | State Street vs. SBM OFFSHORE |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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