Correlation Between SBM Offshore and Worldwide Healthcare

Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Worldwide Healthcare 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 Worldwide Healthcare 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 Worldwide Healthcare Trust, you can compare the effects of market volatilities on SBM Offshore and Worldwide Healthcare 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Worldwide Healthcare.

Diversification Opportunities for SBM Offshore and Worldwide Healthcare

0.0

Correlation Coefficient

SBM Offshore  Worldwide Healthcare

Pay attention - limited upside

The 3 months correlation between SBM and Worldwide is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of SBM Offshore i.e., SBM Offshore and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between SBM Offshore and Worldwide Healthcare

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 2.04 times more return on investment than Worldwide Healthcare. However, SBM Offshore is 2.04 times more volatile than Worldwide Healthcare Trust. It trades about 0.06 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.02 per unit of risk. If you would invest  1,127  in SBM Offshore NV on October 5, 2024 and sell it today you would earn a total of  550.00  from holding SBM Offshore NV or generate 48.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SBM Offshore NV  vs.  Worldwide Healthcare Trust

SBM Offshore NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, SBM Offshore is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Worldwide Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldwide Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SBM Offshore and Worldwide Healthcare

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

The idea behind SBM Offshore NV and Worldwide Healthcare Trust 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.

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.