Correlation Between Everi Holdings and SBM Offshore

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

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

Diversification Opportunities for Everi Holdings and SBM Offshore

0.45

Correlation Coefficient

Everi Holdings  SBM Offshore

Very weak diversification

The 3 months correlation between Everi and SBM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings 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 Everi Holdings 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 Everi Holdings 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 Everi Holdings i.e., Everi Holdings and SBM Offshore go up and down completely randomly.

Pair Corralation between Everi Holdings and SBM Offshore

Given the investment horizon of 90 days Everi Holdings is expected to generate 1.86 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, Everi Holdings is 12.39 times less risky than SBM Offshore. It trades about 0.35 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,801  in SBM Offshore NV on July 30, 2024 and sell it today you would earn a total of  35.00  from holding SBM Offshore NV or generate 1.94% return on investment over 90 days.

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

Everi Holdings  vs.  SBM Offshore NV

Everi Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SBM Offshore NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, SBM Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everi Holdings and SBM Offshore

The main advantage of trading using opposite Everi Holdings and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings 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 Everi Holdings 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.