Correlation Between BW Offshore and Helgeland Sparebank
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Helgeland Sparebank 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 Helgeland Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Helgeland Sparebank, you can compare the effects of market volatilities on BW Offshore and Helgeland Sparebank 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 Helgeland Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Helgeland Sparebank.
Diversification Opportunities for BW Offshore and Helgeland Sparebank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BWO and Helgeland is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Helgeland Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helgeland Sparebank 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 Helgeland Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helgeland Sparebank has no effect on the direction of BW Offshore i.e., BW Offshore and Helgeland Sparebank go up and down completely randomly.
Pair Corralation between BW Offshore and Helgeland Sparebank
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.57 times less return on investment than Helgeland Sparebank. But when comparing it to its historical volatility, BW Offshore is 1.81 times less risky than Helgeland Sparebank. It trades about 0.16 of its potential returns per unit of risk. Helgeland Sparebank is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 15,480 in Helgeland Sparebank on November 27, 2024 and sell it today you would earn a total of 920.00 from holding Helgeland Sparebank or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Helgeland Sparebank
Performance |
| Timeline |
| BW Offshore |
| Helgeland Sparebank |
BW Offshore and Helgeland Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Helgeland Sparebank
The main advantage of trading using opposite BW Offshore and Helgeland Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Helgeland Sparebank 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 Helgeland Sparebank will offset losses from the drop in Helgeland Sparebank's long position.The idea behind BW Offshore and Helgeland Sparebank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Helgeland Sparebank vs. Sparebank 1 Nord Norge | Helgeland Sparebank vs. Sparebank 1 SMN | Helgeland Sparebank vs. Sparebanken Vest | Helgeland Sparebank vs. Sparebanken Mre |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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