Correlation Between BW Offshore and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both BW Offshore and JLEN 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 JLEN 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 JLEN Environmental Assets, you can compare the effects of market volatilities on BW Offshore and JLEN 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and JLEN Environmental.
Diversification Opportunities for BW Offshore and JLEN Environmental
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0RKH and JLEN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of BW Offshore i.e., BW Offshore and JLEN Environmental go up and down completely randomly.
Pair Corralation between BW Offshore and JLEN Environmental
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.58 times more return on investment than JLEN Environmental. However, BW Offshore is 1.58 times more volatile than JLEN Environmental Assets. It trades about -0.14 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.32 per unit of risk. If you would invest 3,080 in BW Offshore on September 3, 2024 and sell it today you would lose (292.00) from holding BW Offshore or give up 9.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
BW Offshore vs. JLEN Environmental Assets
Performance |
| Timeline |
| BW Offshore |
| JLEN Environmental Assets |
BW Offshore and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and JLEN Environmental
The main advantage of trading using opposite BW Offshore and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, JLEN 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| BW Offshore vs. Catalyst Media Group | BW Offshore vs. CATLIN GROUP | BW Offshore vs. Magnora ASA | BW Offshore vs. RTW Venture Fund |
| JLEN Environmental vs. Datagroup SE | JLEN Environmental vs. BW Offshore | JLEN Environmental vs. Monks Investment Trust | JLEN Environmental vs. Schroders Investment Trusts |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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