Correlation Between SBM OFFSHORE and Caseys General

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

By analyzing existing cross correlation between SBM OFFSHORE and Caseys General Stores, you can compare the effects of market volatilities on SBM OFFSHORE and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Caseys General.

Diversification Opportunities for SBM OFFSHORE and Caseys General

0.13

Correlation Coefficient

SBM OFFSHORE  Caseys General

Average diversification

The 3 months correlation between SBM and Caseys is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Caseys General go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and Caseys General

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.47 times more return on investment than Caseys General. However, SBM OFFSHORE is 1.47 times more volatile than Caseys General Stores. It trades about 0.19 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.03 per unit of risk. If you would invest  1,675  in SBM OFFSHORE on December 3, 2024 and sell it today you would earn a total of  300.00  from holding SBM OFFSHORE or generate 17.91% return on investment over 90 days.

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

SBM OFFSHORE  vs.  Caseys General Stores

SBM OFFSHORE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SBM OFFSHORE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SBM OFFSHORE and Caseys General

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

The idea behind SBM OFFSHORE and Caseys General Stores 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.