Correlation Between Unilever PLC and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Unilever PLC 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 Unilever PLC and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and SBM Offshore NV, you can compare the effects of market volatilities on Unilever PLC 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 Unilever PLC with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and SBM Offshore.
Diversification Opportunities for Unilever PLC and SBM Offshore
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Unilever and SBM is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC 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 Unilever PLC 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 Unilever PLC 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 Unilever PLC i.e., Unilever PLC and SBM Offshore go up and down completely randomly.
Pair Corralation between Unilever PLC and SBM Offshore
Assuming the 90 days trading horizon Unilever PLC is expected to under-perform the SBM Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC is 1.65 times less risky than SBM Offshore. The stock trades about -0.27 of its potential returns per unit of risk. The SBM Offshore NV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,666 in SBM Offshore NV on August 24, 2024 and sell it today you would earn a total of 112.00 from holding SBM Offshore NV or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. SBM Offshore NV
Performance |
| Timeline |
| Unilever PLC |
| SBM Offshore NV |
Unilever PLC and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and SBM Offshore
The main advantage of trading using opposite Unilever PLC and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC 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.| Unilever PLC vs. SBM Offshore NV | Unilever PLC vs. Wiener Privatbank SE | Unilever PLC vs. Vienna Insurance Group | Unilever PLC vs. UNIQA Insurance Group |
| SBM Offshore vs. AMAG Austria Metall | SBM Offshore vs. Addiko Bank AG | SBM Offshore vs. Erste Group Bank | SBM Offshore vs. Universal Music Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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