Correlation Between BW Offshore and FinecoBank SpA
Can any of the company-specific risk be diversified away by investing in both BW Offshore and FinecoBank SpA 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 FinecoBank SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and FinecoBank SpA, you can compare the effects of market volatilities on BW Offshore and FinecoBank SpA 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 FinecoBank SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and FinecoBank SpA.
Diversification Opportunities for BW Offshore and FinecoBank SpA
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and FinecoBank is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA 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 FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of BW Offshore i.e., BW Offshore and FinecoBank SpA go up and down completely randomly.
Pair Corralation between BW Offshore and FinecoBank SpA
Assuming the 90 days trading horizon BW Offshore is expected to generate 2.24 times more return on investment than FinecoBank SpA. However, BW Offshore is 2.24 times more volatile than FinecoBank SpA. It trades about 0.32 of its potential returns per unit of risk. FinecoBank SpA is currently generating about 0.2 per unit of risk. If you would invest 2,758 in BW Offshore on October 14, 2024 and sell it today you would earn a total of 345.00 from holding BW Offshore or generate 12.51% 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. FinecoBank SpA
Performance |
| Timeline |
| BW Offshore |
| FinecoBank SpA |
BW Offshore and FinecoBank SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and FinecoBank SpA
The main advantage of trading using opposite BW Offshore and FinecoBank SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, FinecoBank SpA 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 FinecoBank SpA will offset losses from the drop in FinecoBank SpA's long position.| BW Offshore vs. PPHE Hotel Group | BW Offshore vs. STMicroelectronics NV | BW Offshore vs. Arrow Electronics | BW Offshore vs. Dairy Farm International |
| FinecoBank SpA vs. BW Offshore | FinecoBank SpA vs. Morgan Advanced Materials | FinecoBank SpA vs. Compagnie Plastic Omnium | FinecoBank SpA vs. UNIQA Insurance Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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