Correlation Between 2020 Bulkers and BW LPG
Can any of the company-specific risk be diversified away by investing in both 2020 Bulkers and BW LPG 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 2020 Bulkers and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2020 Bulkers and BW LPG, you can compare the effects of market volatilities on 2020 Bulkers and BW LPG 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 2020 Bulkers with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2020 Bulkers and BW LPG.
Diversification Opportunities for 2020 Bulkers and BW LPG
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2020 and BWLPG is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding 2020 Bulkers and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG and 2020 Bulkers 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 2020 Bulkers are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG has no effect on the direction of 2020 Bulkers i.e., 2020 Bulkers and BW LPG go up and down completely randomly.
Pair Corralation between 2020 Bulkers and BW LPG
Assuming the 90 days trading horizon 2020 Bulkers is expected to generate 1.14 times more return on investment than BW LPG. However, 2020 Bulkers is 1.14 times more volatile than BW LPG. It trades about 0.11 of its potential returns per unit of risk. BW LPG is currently generating about 0.1 per unit of risk. If you would invest 13,137 in 2020 Bulkers on August 25, 2024 and sell it today you would earn a total of 673.00 from holding 2020 Bulkers or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2020 Bulkers vs. BW LPG
Performance |
| Timeline |
| 2020 Bulkers |
| BW LPG |
2020 Bulkers and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2020 Bulkers and BW LPG
The main advantage of trading using opposite 2020 Bulkers and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2020 Bulkers position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| 2020 Bulkers vs. Okeanis Eco Tankers | 2020 Bulkers vs. MPC Container Ships | 2020 Bulkers vs. Belships | 2020 Bulkers vs. Hafnia |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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