Correlation Between SBM Offshore and Fidelity National

Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Fidelity National 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 SBM Offshore and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBM Offshore NV and Fidelity National Information, you can compare the effects of market volatilities on SBM Offshore and Fidelity National 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 SBM Offshore with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Fidelity National.

Diversification Opportunities for SBM Offshore and Fidelity National

-0.7

Correlation Coefficient

SBM Offshore  Fidelity National

Excellent diversification

The 3 months correlation between SBM and Fidelity is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and SBM 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 SBM Offshore NV are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of SBM Offshore i.e., SBM Offshore and Fidelity National go up and down completely randomly.

Pair Corralation between SBM Offshore and Fidelity National

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.14 times more return on investment than Fidelity National. However, SBM Offshore is 1.14 times more volatile than Fidelity National Information. It trades about 0.13 of its potential returns per unit of risk. Fidelity National Information is currently generating about -0.05 per unit of risk. If you would invest  1,692  in SBM Offshore NV on December 30, 2024 and sell it today you would earn a total of  319.00  from holding SBM Offshore NV or generate 18.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

SBM Offshore NV  vs.  Fidelity National Information

SBM Offshore NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, SBM Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SBM Offshore and Fidelity National

The main advantage of trading using opposite SBM Offshore and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.

The idea behind SBM Offshore NV and Fidelity National Information pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.