Correlation Between BW Offshore and Sparebanken Vest
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Sparebanken Vest 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 BW Offshore and Sparebanken Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Sparebanken Vest, you can compare the effects of market volatilities on BW Offshore and Sparebanken Vest 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 BW Offshore with a short position of Sparebanken Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Sparebanken Vest.
Diversification Opportunities for BW Offshore and Sparebanken Vest
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and Sparebanken is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and BW Offshore 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 BW Offshore are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of BW Offshore i.e., BW Offshore and Sparebanken Vest go up and down completely randomly.
Pair Corralation between BW Offshore and Sparebanken Vest
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.46 times more return on investment than Sparebanken Vest. However, BW Offshore is 1.46 times more volatile than Sparebanken Vest. It trades about 0.27 of its potential returns per unit of risk. Sparebanken Vest is currently generating about 0.33 per unit of risk. If you would invest 2,745 in BW Offshore on October 10, 2024 and sell it today you would earn a total of 300.00 from holding BW Offshore or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Sparebanken Vest
Performance |
| Timeline |
| BW Offshore |
| Sparebanken Vest |
BW Offshore and Sparebanken Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Sparebanken Vest
The main advantage of trading using opposite BW Offshore and Sparebanken Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Sparebanken Vest 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 Sparebanken Vest will offset losses from the drop in Sparebanken Vest's long position.| BW Offshore vs. Oxford Technology 2 | BW Offshore vs. Zoom Video Communications | BW Offshore vs. International Biotechnology Trust | BW Offshore vs. Infrastrutture Wireless Italiane |
| Sparebanken Vest vs. Everyman Media Group | Sparebanken Vest vs. AcadeMedia AB | Sparebanken Vest vs. Grand Vision Media | Sparebanken Vest vs. One Media iP |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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