Correlation Between Schlumberger and Oceaneering International

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Can any of the company-specific risk be diversified away by investing in both Schlumberger and Oceaneering International 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 Schlumberger and Oceaneering International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger NV and Oceaneering International, you can compare the effects of market volatilities on Schlumberger and Oceaneering International 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 Schlumberger with a short position of Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and Oceaneering International.

Diversification Opportunities for Schlumberger and Oceaneering International

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Schlumberger and Oceaneering is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger NV and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International and Schlumberger 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 Schlumberger NV are associated (or correlated) with Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Schlumberger i.e., Schlumberger and Oceaneering International go up and down completely randomly.

Pair Corralation between Schlumberger and Oceaneering International

Considering the 90-day investment horizon Schlumberger is expected to generate 1.61 times less return on investment than Oceaneering International. But when comparing it to its historical volatility, Schlumberger NV is 1.35 times less risky than Oceaneering International. It trades about 0.04 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,447  in Oceaneering International on December 30, 2023 and sell it today you would earn a total of  893.00  from holding Oceaneering International or generate 61.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Schlumberger NV  vs.  Oceaneering International

 Performance 
       Timeline  
Schlumberger NV 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Schlumberger may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Oceaneering International 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Oceaneering International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Schlumberger and Oceaneering International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Schlumberger and Oceaneering International

The main advantage of trading using opposite Schlumberger and Oceaneering International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger position performs unexpectedly, Oceaneering International 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 Oceaneering International will offset losses from the drop in Oceaneering International's long position.
The idea behind Schlumberger NV and Oceaneering International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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