Correlation Between BW Offshore and Target Corp
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Target Corp 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 Target Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Target Corp, you can compare the effects of market volatilities on BW Offshore and Target Corp 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 Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Target Corp.
Diversification Opportunities for BW Offshore and Target Corp
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between 0RKH and Target is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp 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 Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of BW Offshore i.e., BW Offshore and Target Corp go up and down completely randomly.
Pair Corralation between BW Offshore and Target Corp
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.83 times more return on investment than Target Corp. However, BW Offshore is 1.21 times less risky than Target Corp. It trades about -0.01 of its potential returns per unit of risk. Target Corp is currently generating about -0.02 per unit of risk. If you would invest 2,966 in BW Offshore on September 1, 2024 and sell it today you would lose (178.00) from holding BW Offshore or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Target Corp
Performance |
| Timeline |
| BW Offshore |
| Target Corp |
BW Offshore and Target Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Target Corp
The main advantage of trading using opposite BW Offshore and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
| Target Corp vs. Uniper SE | Target Corp vs. Mulberry Group PLC | Target Corp vs. London Security Plc | Target Corp vs. Triad Group PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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