Correlation Between SBM Offshore and TomTom NV

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

Diversification Opportunities for SBM Offshore and TomTom NV

0.19

Correlation Coefficient

SBM Offshore  TomTom NV

Average diversification

The 3 months correlation between SBM and TomTom is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and TomTom NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomTom NV 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 TomTom NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomTom NV has no effect on the direction of SBM Offshore i.e., SBM Offshore and TomTom NV go up and down completely randomly.

Pair Corralation between SBM Offshore and TomTom NV

Assuming the 90 days trading horizon SBM Offshore NV is expected to under-perform the TomTom NV. But the stock apears to be less risky and, when comparing its historical volatility, SBM Offshore NV is 1.75 times less risky than TomTom NV. The stock trades about 0.0 of its potential returns per unit of risk. The TomTom NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  532.00  in TomTom NV on September 19, 2024 and sell it today you would earn a total of  13.00  from holding TomTom NV or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SBM Offshore NV  vs.  TomTom NV

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 comparatively stable basic indicators, SBM Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TomTom NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TomTom NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TomTom NV 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 TomTom NV

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

The idea behind SBM Offshore NV and TomTom NV 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..