Correlation Between Aasen Sparebank and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Aasen Sparebank and BW Offshore 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 Aasen Sparebank and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aasen Sparebank and BW Offshore, you can compare the effects of market volatilities on Aasen Sparebank and BW Offshore 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 Aasen Sparebank with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aasen Sparebank and BW Offshore.
Diversification Opportunities for Aasen Sparebank and BW Offshore
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aasen and BWO is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aasen Sparebank and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Aasen Sparebank 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 Aasen Sparebank are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Aasen Sparebank i.e., Aasen Sparebank and BW Offshore go up and down completely randomly.
Pair Corralation between Aasen Sparebank and BW Offshore
Assuming the 90 days trading horizon Aasen Sparebank is expected to under-perform the BW Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Aasen Sparebank is 1.12 times less risky than BW Offshore. The stock trades about 0.0 of its potential returns per unit of risk. The BW Offshore is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,349 in BW Offshore on September 1, 2024 and sell it today you would earn a total of 441.00 from holding BW Offshore or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aasen Sparebank vs. BW Offshore
Performance |
| Timeline |
| Aasen Sparebank |
| BW Offshore |
Aasen Sparebank and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aasen Sparebank and BW Offshore
The main advantage of trading using opposite Aasen Sparebank and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aasen Sparebank position performs unexpectedly, BW Offshore 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 Offshore will offset losses from the drop in BW Offshore's long position.| Aasen Sparebank vs. Grong Sparebank | Aasen Sparebank vs. Melhus Sparebank | Aasen Sparebank vs. Aurskog Sparebank | Aasen Sparebank vs. Sparebanken Ost |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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