Correlation Between BW Offshore and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Wheaton Precious 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 Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Wheaton Precious Metals, you can compare the effects of market volatilities on BW Offshore and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Wheaton Precious.
Diversification Opportunities for BW Offshore and Wheaton Precious
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0RKH and Wheaton is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of BW Offshore i.e., BW Offshore and Wheaton Precious go up and down completely randomly.
Pair Corralation between BW Offshore and Wheaton Precious
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.61 times more return on investment than Wheaton Precious. However, BW Offshore is 1.61 times more volatile than Wheaton Precious Metals. It trades about -0.04 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.1 per unit of risk. If you would invest 2,901 in BW Offshore on September 1, 2024 and sell it today you would lose (113.00) from holding BW Offshore or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Wheaton Precious Metals
Performance |
| Timeline |
| BW Offshore |
| Wheaton Precious Metals |
BW Offshore and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Wheaton Precious
The main advantage of trading using opposite BW Offshore and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
| Wheaton Precious vs. Schroders Investment Trusts | Wheaton Precious vs. FC Investment Trust | Wheaton Precious vs. Hansa Investment | Wheaton Precious vs. Sligro Food Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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