Correlation Between BW Offshore and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Livermore Investments 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 Livermore Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Livermore Investments Group, you can compare the effects of market volatilities on BW Offshore and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Livermore Investments.
Diversification Opportunities for BW Offshore and Livermore Investments
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0RKH and Livermore is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of BW Offshore i.e., BW Offshore and Livermore Investments go up and down completely randomly.
Pair Corralation between BW Offshore and Livermore Investments
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Livermore Investments. In addition to that, BW Offshore is 6.06 times more volatile than Livermore Investments Group. It trades about -0.13 of its total potential returns per unit of risk. Livermore Investments Group is currently generating about 0.1 per unit of volatility. If you would invest 4,500 in Livermore Investments Group on September 12, 2024 and sell it today you would earn a total of 50.00 from holding Livermore Investments Group or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Livermore Investments Group
Performance |
| Timeline |
| BW Offshore |
| Livermore Investments |
BW Offshore and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Livermore Investments
The main advantage of trading using opposite BW Offshore and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| BW Offshore vs. Hong Kong Land | BW Offshore vs. Neometals | BW Offshore vs. Coor Service Management | BW Offshore vs. Fidelity Sustainable USD |
| Livermore Investments vs. Samsung Electronics Co | Livermore Investments vs. Samsung Electronics Co | Livermore Investments vs. Hyundai Motor | Livermore Investments vs. Toyota Motor Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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