Correlation Between SBM Offshore and RAYTHEON

Can any of the company-specific risk be diversified away by investing in both SBM Offshore and RAYTHEON 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 RAYTHEON 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 RAYTHEON 315 percent, you can compare the effects of market volatilities on SBM Offshore and RAYTHEON 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 RAYTHEON. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and RAYTHEON.

Diversification Opportunities for SBM Offshore and RAYTHEON

0.09

Correlation Coefficient

SBM Offshore  RAYTHEON

Significant diversification

The 3 months correlation between SBM and RAYTHEON is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and RAYTHEON 315 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON 315 percent 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 RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON 315 percent has no effect on the direction of SBM Offshore i.e., SBM Offshore and RAYTHEON go up and down completely randomly.

Pair Corralation between SBM Offshore and RAYTHEON

Assuming the 90 days horizon SBM Offshore NV is expected to generate 2.25 times more return on investment than RAYTHEON. However, SBM Offshore is 2.25 times more volatile than RAYTHEON 315 percent. It trades about -0.11 of its potential returns per unit of risk. RAYTHEON 315 percent is currently generating about -0.37 per unit of risk. If you would invest  1,900  in SBM Offshore NV on October 11, 2024 and sell it today you would lose (157.00) from holding SBM Offshore NV or give up 8.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

SBM Offshore NV  vs.  RAYTHEON 315 percent

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. In spite of fairly strong technical and fundamental indicators, SBM Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RAYTHEON 315 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAYTHEON 315 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for RAYTHEON 315 percent investors.

Pair Trading with SBM Offshore and RAYTHEON

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

The idea behind SBM Offshore NV and RAYTHEON 315 percent 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.