Correlation Between BW Offshore and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Lloyds Banking 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 Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Lloyds Banking Group, you can compare the effects of market volatilities on BW Offshore and Lloyds Banking 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 Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Lloyds Banking.
Diversification Opportunities for BW Offshore and Lloyds Banking
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and Lloyds is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of BW Offshore i.e., BW Offshore and Lloyds Banking go up and down completely randomly.
Pair Corralation between BW Offshore and Lloyds Banking
Assuming the 90 days trading horizon BW Offshore is expected to generate 6.03 times more return on investment than Lloyds Banking. However, BW Offshore is 6.03 times more volatile than Lloyds Banking Group. It trades about 0.04 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 per unit of risk. If you would invest 2,161 in BW Offshore on October 16, 2024 and sell it today you would earn a total of 929.00 from holding BW Offshore or generate 42.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.59% |
| Values | Daily Returns |
BW Offshore vs. Lloyds Banking Group
Performance |
| Timeline |
| BW Offshore |
| Lloyds Banking Group |
BW Offshore and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Lloyds Banking
The main advantage of trading using opposite BW Offshore and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| BW Offshore vs. Griffin Mining | BW Offshore vs. Broadcom | BW Offshore vs. Broadridge Financial Solutions | BW Offshore vs. First Majestic Silver |
| Lloyds Banking vs. Norwegian Air Shuttle | Lloyds Banking vs. Pentair PLC | Lloyds Banking vs. AMG Advanced Metallurgical | Lloyds Banking vs. BW Offshore |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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