Correlation Between BW Offshore and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Impax Environmental 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 Impax Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Impax Environmental Markets, you can compare the effects of market volatilities on BW Offshore and Impax Environmental 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Impax Environmental.
Diversification Opportunities for BW Offshore and Impax Environmental
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0RKH and Impax is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of BW Offshore i.e., BW Offshore and Impax Environmental go up and down completely randomly.
Pair Corralation between BW Offshore and Impax Environmental
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Impax Environmental. In addition to that, BW Offshore is 2.15 times more volatile than Impax Environmental Markets. It trades about -0.01 of its total potential returns per unit of risk. Impax Environmental Markets is currently generating about 0.24 per unit of volatility. If you would invest 38,900 in Impax Environmental Markets on November 4, 2024 and sell it today you would earn a total of 1,800 from holding Impax Environmental Markets or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Impax Environmental Markets
Performance |
| Timeline |
| BW Offshore |
| Impax Environmental |
BW Offshore and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Impax Environmental
The main advantage of trading using opposite BW Offshore and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Impax Environmental 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| BW Offshore vs. DXC Technology Co | BW Offshore vs. EJF Investments | BW Offshore vs. Seraphim Space Investment | BW Offshore vs. Monks Investment Trust |
| Impax Environmental vs. Gamma Communications PLC | Impax Environmental vs. Orient Telecoms | Impax Environmental vs. Cairo Communication SpA | Impax Environmental vs. Seche Environnement SA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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