Correlation Between Triton International and Sable Offshore

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

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

Diversification Opportunities for Triton International and Sable Offshore

-0.29

Correlation Coefficient

Triton International  Sable Offshore

Very good diversification

The 3 months correlation between Triton and Sable is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp and Triton International 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 Triton International Limited are associated (or correlated) with Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Triton International i.e., Triton International and Sable Offshore go up and down completely randomly.

Pair Corralation between Triton International and Sable Offshore

Assuming the 90 days trading horizon Triton International Limited is expected to under-perform the Sable Offshore. But the preferred stock apears to be less risky and, when comparing its historical volatility, Triton International Limited is 11.83 times less risky than Sable Offshore. The preferred stock trades about -0.22 of its potential returns per unit of risk. The Sable Offshore Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,905  in Sable Offshore Corp on October 6, 2024 and sell it today you would earn a total of  423.00  from holding Sable Offshore Corp or generate 22.2% return on investment over 90 days.

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

Triton International Limited  vs.  Sable Offshore Corp

Triton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sable Offshore Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triton International and Sable Offshore

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

The idea behind Triton International Limited and Sable Offshore Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.