Correlation Between BW LPG and MPC Container
Can any of the company-specific risk be diversified away by investing in both BW LPG and MPC Container 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 LPG and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW LPG and MPC Container Ships, you can compare the effects of market volatilities on BW LPG and MPC Container 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 LPG with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and MPC Container.
Diversification Opportunities for BW LPG and MPC Container
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWLLY and MPC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and BW LPG 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 LPG are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of BW LPG i.e., BW LPG and MPC Container go up and down completely randomly.
Pair Corralation between BW LPG and MPC Container
Assuming the 90 days horizon BW LPG is expected to generate 1.5 times more return on investment than MPC Container. However, BW LPG is 1.5 times more volatile than MPC Container Ships. It trades about 0.07 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.05 per unit of risk. If you would invest 868.00 in BW LPG on September 2, 2024 and sell it today you would earn a total of 686.00 from holding BW LPG or generate 79.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.86% |
| Values | Daily Returns |
BW LPG vs. MPC Container Ships
Performance |
| Timeline |
| BW LPG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MPC Container Ships |
BW LPG and MPC Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and MPC Container
The main advantage of trading using opposite BW LPG and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, MPC Container 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 MPC Container will offset losses from the drop in MPC Container's long position.| BW LPG vs. Kawasaki Kisen Kaisha | BW LPG vs. Pacific Basin Shipping | BW LPG vs. Hapag Lloyd Aktiengesellschaft | BW LPG vs. Hapag Lloyd Aktiengesellschaft |
| MPC Container vs. Pacific Basin Shipping | MPC Container vs. Safe Bulkers | MPC Container vs. Hutchison Port Holdings | MPC Container vs. Orient Overseas Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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