Correlation Between Odfjell Drilling and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling 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 Odfjell Drilling and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odfjell Drilling and BW Offshore, you can compare the effects of market volatilities on Odfjell Drilling 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 Odfjell Drilling with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and BW Offshore.
Diversification Opportunities for Odfjell Drilling and BW Offshore
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Odfjell and 0RKH is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Odfjell Drilling 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 Odfjell Drilling 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 Odfjell Drilling i.e., Odfjell Drilling and BW Offshore go up and down completely randomly.
Pair Corralation between Odfjell Drilling and BW Offshore
Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 0.59 times more return on investment than BW Offshore. However, Odfjell Drilling is 1.71 times less risky than BW Offshore. It trades about -0.06 of its potential returns per unit of risk. BW Offshore is currently generating about -0.04 per unit of risk. If you would invest 4,988 in Odfjell Drilling on September 1, 2024 and sell it today you would lose (138.00) from holding Odfjell Drilling or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odfjell Drilling vs. BW Offshore
Performance |
| Timeline |
| Odfjell Drilling |
| BW Offshore |
Odfjell Drilling and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odfjell Drilling and BW Offshore
The main advantage of trading using opposite Odfjell Drilling and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell Drilling 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.| Odfjell Drilling vs. Sealed Air Corp | Odfjell Drilling vs. Sabre Insurance Group | Odfjell Drilling vs. Ironveld Plc | Odfjell Drilling vs. JLEN Environmental Assets |
| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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