Correlation Between BW Offshore and Europa Metals
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Europa Metals 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 Europa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Europa Metals, you can compare the effects of market volatilities on BW Offshore and Europa Metals 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 Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Europa Metals.
Diversification Opportunities for BW Offshore and Europa Metals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0RKH and Europa is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of BW Offshore i.e., BW Offshore and Europa Metals go up and down completely randomly.
Pair Corralation between BW Offshore and Europa Metals
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.6 times more return on investment than Europa Metals. However, BW Offshore is 1.65 times less risky than Europa Metals. It trades about 0.03 of its potential returns per unit of risk. Europa Metals is currently generating about -0.05 per unit of risk. If you would invest 2,175 in BW Offshore on January 16, 2025 and sell it today you would earn a total of 530.00 from holding BW Offshore or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.8% |
| Values | Daily Returns |
BW Offshore vs. Europa Metals
Performance |
| Timeline |
| BW Offshore |
| Europa Metals |
BW Offshore and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Europa Metals
The main advantage of trading using opposite BW Offshore and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Europa Metals 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| BW Offshore vs. Silver Bullet Data | BW Offshore vs. Golden Metal Resources | BW Offshore vs. Alliance Data Systems | BW Offshore vs. GlobalData PLC |
| Europa Metals vs. Givaudan SA | Europa Metals vs. Atalaya Mining | Europa Metals vs. Central Asia Metals | Europa Metals vs. Metals Exploration 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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