Correlation Between Barnwell Industries and WT Offshore
Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and WT 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 Barnwell Industries and WT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and WT Offshore, you can compare the effects of market volatilities on Barnwell Industries and WT 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 Barnwell Industries with a short position of WT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and WT Offshore.
Diversification Opportunities for Barnwell Industries and WT Offshore
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnwell and WTI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore and Barnwell Industries 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 Barnwell Industries are associated (or correlated) with WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Barnwell Industries i.e., Barnwell Industries and WT Offshore go up and down completely randomly.
Pair Corralation between Barnwell Industries and WT Offshore
Considering the 90-day investment horizon Barnwell Industries is expected to generate 1.79 times more return on investment than WT Offshore. However, Barnwell Industries is 1.79 times more volatile than WT Offshore. It trades about 0.16 of its potential returns per unit of risk. WT Offshore is currently generating about -0.21 per unit of risk. If you would invest 154.00 in Barnwell Industries on November 3, 2024 and sell it today you would earn a total of 24.00 from holding Barnwell Industries or generate 15.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnwell Industries vs. WT Offshore
Performance |
| Timeline |
| Barnwell Industries |
| WT Offshore |
Barnwell Industries and WT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnwell Industries and WT Offshore
The main advantage of trading using opposite Barnwell Industries and WT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, WT 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 WT Offshore will offset losses from the drop in WT Offshore's long position.| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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