Correlation Between BW Offshore and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Spirent Communications 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 Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Spirent Communications plc, you can compare the effects of market volatilities on BW Offshore and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Spirent Communications.
Diversification Opportunities for BW Offshore and Spirent Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and Spirent is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of BW Offshore i.e., BW Offshore and Spirent Communications go up and down completely randomly.
Pair Corralation between BW Offshore and Spirent Communications
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.77 times more return on investment than Spirent Communications. However, BW Offshore is 1.3 times less risky than Spirent Communications. It trades about 0.04 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.01 per unit of risk. If you would invest 2,250 in BW Offshore on November 2, 2024 and sell it today you would earn a total of 928.00 from holding BW Offshore or generate 41.24% 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. Spirent Communications plc
Performance |
| Timeline |
| BW Offshore |
| Spirent Communications |
BW Offshore and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Spirent Communications
The main advantage of trading using opposite BW Offshore and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| BW Offshore vs. Young Cos Brewery | BW Offshore vs. European Metals Holdings | BW Offshore vs. Alien Metals | BW Offshore vs. Fevertree Drinks Plc |
| Spirent Communications vs. Fonix Mobile plc | Spirent Communications vs. mobilezone holding AG | Spirent Communications vs. Auto Trader Group | Spirent Communications vs. JPMorgan Japanese Investment |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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