Correlation Between Sable Offshore and ON Semiconductor

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

By analyzing existing cross correlation between Sable Offshore Corp and ON Semiconductor, you can compare the effects of market volatilities on Sable Offshore and ON Semiconductor 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 Sable Offshore with a short position of ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and ON Semiconductor.

Diversification Opportunities for Sable Offshore and ON Semiconductor

-0.05

Correlation Coefficient

Sable Offshore  ON Semiconductor

Good diversification

The 3 months correlation between Sable and ON Semiconductor is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor and Sable 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 Sable Offshore Corp are associated (or correlated) with ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Sable Offshore i.e., Sable Offshore and ON Semiconductor go up and down completely randomly.

Pair Corralation between Sable Offshore and ON Semiconductor

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.12 times more return on investment than ON Semiconductor. However, Sable Offshore is 1.12 times more volatile than ON Semiconductor. It trades about 0.07 of its potential returns per unit of risk. ON Semiconductor is currently generating about 0.01 per unit of risk. If you would invest  1,011  in Sable Offshore Corp on October 10, 2024 and sell it today you would earn a total of  1,339  from holding Sable Offshore Corp or generate 132.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.55%
Values	Daily Returns

Sable Offshore Corp  vs.  ON Semiconductor

Sable Offshore Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sable Offshore and ON Semiconductor

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

The idea behind Sable Offshore Corp and ON Semiconductor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.