Correlation Between Sparebanken Vest and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and BW 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 Sparebanken Vest and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Vest and BW Offshore, you can compare the effects of market volatilities on Sparebanken Vest and BW 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 Sparebanken Vest with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and BW Offshore.
Diversification Opportunities for Sparebanken Vest and BW Offshore
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sparebanken and 0RKH is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Sparebanken Vest 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 Sparebanken Vest are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and BW Offshore go up and down completely randomly.
Pair Corralation between Sparebanken Vest and BW Offshore
Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 1.23 times less return on investment than BW Offshore. But when comparing it to its historical volatility, Sparebanken Vest is 1.46 times less risky than BW Offshore. It trades about 0.33 of its potential returns per unit of risk. BW Offshore is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,740 in BW Offshore on October 11, 2024 and sell it today you would earn a total of 305.00 from holding BW Offshore or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Vest vs. BW Offshore
Performance |
| Timeline |
| Sparebanken Vest |
| BW Offshore |
Sparebanken Vest and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Vest and BW Offshore
The main advantage of trading using opposite Sparebanken Vest and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, BW 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Sparebanken Vest vs. Trellus Health plc | Sparebanken Vest vs. Cardinal Health | Sparebanken Vest vs. Eco Animal Health | Sparebanken Vest vs. Future Metals NL |
| BW Offshore vs. Aeorema Communications Plc | BW Offshore vs. Spirent Communications plc | BW Offshore vs. Polar Capital Technology | BW Offshore vs. Technicolor |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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