Correlation Between Wolters Kluwer and SBM Offshore

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

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

Diversification Opportunities for Wolters Kluwer and SBM Offshore

-0.07

Correlation Coefficient

Wolters Kluwer  SBM Offshore

Good diversification

The 3 months correlation between Wolters and SBM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Wolters Kluwer 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 Wolters Kluwer NV are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Wolters Kluwer i.e., Wolters Kluwer and SBM Offshore go up and down completely randomly.

Pair Corralation between Wolters Kluwer and SBM Offshore

Assuming the 90 days trading horizon Wolters Kluwer NV is expected to generate 0.93 times more return on investment than SBM Offshore. However, Wolters Kluwer NV is 1.07 times less risky than SBM Offshore. It trades about 0.05 of its potential returns per unit of risk. SBM Offshore NV is currently generating about -0.31 per unit of risk. If you would invest  15,795  in Wolters Kluwer NV on September 23, 2024 and sell it today you would earn a total of  125.00  from holding Wolters Kluwer NV or generate 0.79% return on investment over 90 days.

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

Wolters Kluwer NV  vs.  SBM Offshore NV

Wolters Kluwer NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwer NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Wolters Kluwer is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

SBM Offshore NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, SBM Offshore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wolters Kluwer and SBM Offshore

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

The idea behind Wolters Kluwer NV and SBM Offshore 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.