Correlation Between BW Offshore and Assurant
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Assurant 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 Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore Limited and Assurant, you can compare the effects of market volatilities on BW Offshore and Assurant 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 Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Assurant.
Diversification Opportunities for BW Offshore and Assurant
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWOFY and Assurant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Limited are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of BW Offshore i.e., BW Offshore and Assurant go up and down completely randomly.
Pair Corralation between BW Offshore and Assurant
Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the Assurant. But the pink sheet apears to be less risky and, when comparing its historical volatility, BW Offshore Limited is 1.49 times less risky than Assurant. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Assurant is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 19,355 in Assurant on August 30, 2024 and sell it today you would earn a total of 3,350 from holding Assurant or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BW Offshore Limited vs. Assurant
Performance |
| Timeline |
| BW Offshore Limited |
| Assurant |
BW Offshore and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Assurant
The main advantage of trading using opposite BW Offshore and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
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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