Correlation Between SBM OFFSHORE and Mercedes-Benz Group
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Mercedes-Benz Group 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 Mercedes-Benz Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Mercedes Benz Group AG, you can compare the effects of market volatilities on SBM OFFSHORE and Mercedes-Benz Group 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 Mercedes-Benz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Mercedes-Benz Group.
Diversification Opportunities for SBM OFFSHORE and Mercedes-Benz Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Mercedes-Benz is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes-Benz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Mercedes-Benz Group go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Mercedes-Benz Group
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.71 times more return on investment than Mercedes-Benz Group. However, SBM OFFSHORE is 1.41 times less risky than Mercedes-Benz Group. It trades about 0.12 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.17 per unit of risk. If you would invest 1,698 in SBM OFFSHORE on October 11, 2024 and sell it today you would earn a total of 34.00 from holding SBM OFFSHORE or generate 2.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SBM OFFSHORE vs. Mercedes Benz Group AG
Performance |
Timeline |
SBM OFFSHORE |
Mercedes Benz Group |
SBM OFFSHORE and Mercedes-Benz Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SBM OFFSHORE and Mercedes-Benz Group
The main advantage of trading using opposite SBM OFFSHORE and Mercedes-Benz Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Mercedes-Benz Group 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 Mercedes-Benz Group will offset losses from the drop in Mercedes-Benz Group's long position.SBM OFFSHORE vs. Sims Metal Management | SBM OFFSHORE vs. Coor Service Management | SBM OFFSHORE vs. SPECTRAL MEDICAL | SBM OFFSHORE vs. Jupiter Fund Management |
Mercedes-Benz Group vs. Hyatt Hotels | Mercedes-Benz Group vs. InterContinental Hotels Group | Mercedes-Benz Group vs. SBM OFFSHORE | Mercedes-Benz Group vs. Xenia Hotels Resorts |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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