Correlation Between Smithfield Foods, and Transocean
Can any of the company-specific risk be diversified away by investing in both Smithfield Foods, and Transocean 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 Smithfield Foods, and Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithfield Foods, Common and Transocean, you can compare the effects of market volatilities on Smithfield Foods, and Transocean 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 Smithfield Foods, with a short position of Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithfield Foods, and Transocean.
Diversification Opportunities for Smithfield Foods, and Transocean
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Smithfield and Transocean is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Smithfield Foods, Common and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean and Smithfield Foods, 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 Smithfield Foods, Common are associated (or correlated) with Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Smithfield Foods, i.e., Smithfield Foods, and Transocean go up and down completely randomly.
Pair Corralation between Smithfield Foods, and Transocean
Considering the 90-day investment horizon Smithfield Foods, is expected to generate 1.35 times less return on investment than Transocean. But when comparing it to its historical volatility, Smithfield Foods, Common is 2.62 times less risky than Transocean. It trades about 0.15 of its potential returns per unit of risk. Transocean is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 269.00 in Transocean on June 5, 2025 and sell it today you would earn a total of 37.00 from holding Transocean or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smithfield Foods, Common vs. Transocean
Performance |
| Timeline |
| Smithfield Foods, Common |
| Transocean |
Smithfield Foods, and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithfield Foods, and Transocean
The main advantage of trading using opposite Smithfield Foods, and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithfield Foods, position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| Smithfield Foods, vs. Kellanova | Smithfield Foods, vs. Bunge Limited | Smithfield Foods, vs. Lamb Weston Holdings | Smithfield Foods, vs. Altria Group |
| Transocean vs. Boyd Gaming | Transocean vs. Cleantech Power Corp | Transocean vs. Ainsworth Game Technology | Transocean vs. SohuCom |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |