Correlation Between BW Offshore and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Odfjell Drilling 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 Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Odfjell Drilling, you can compare the effects of market volatilities on BW Offshore and Odfjell Drilling 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 Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Odfjell Drilling.
Diversification Opportunities for BW Offshore and Odfjell Drilling
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and Odfjell is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling 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 Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of BW Offshore i.e., BW Offshore and Odfjell Drilling go up and down completely randomly.
Pair Corralation between BW Offshore and Odfjell Drilling
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.42 times less return on investment than Odfjell Drilling. In addition to that, BW Offshore is 1.04 times more volatile than Odfjell Drilling. It trades about 0.04 of its total potential returns per unit of risk. Odfjell Drilling is currently generating about 0.07 per unit of volatility. If you would invest 3,371 in Odfjell Drilling on August 29, 2024 and sell it today you would earn a total of 1,404 from holding Odfjell Drilling or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
BW Offshore vs. Odfjell Drilling
Performance |
| Timeline |
| BW Offshore |
| Odfjell Drilling |
BW Offshore and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Odfjell Drilling
The main advantage of trading using opposite BW Offshore and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| BW Offshore vs. Lendinvest PLC | BW Offshore vs. Neometals | BW Offshore vs. Albion Technology General | BW Offshore vs. Jupiter Fund Management |
| Odfjell Drilling vs. Lendinvest PLC | Odfjell Drilling vs. Neometals | Odfjell Drilling vs. Albion Technology General | Odfjell Drilling vs. Jupiter Fund Management |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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