Correlation Between BW Offshore and Dana
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Dana 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 Dana 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 Dana Inc, you can compare the effects of market volatilities on BW Offshore and Dana 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 Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Dana.
Diversification Opportunities for BW Offshore and Dana
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWOFY and Dana is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of BW Offshore i.e., BW Offshore and Dana go up and down completely randomly.
Pair Corralation between BW Offshore and Dana
Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.53 times more return on investment than Dana. However, BW Offshore Limited is 1.87 times less risky than Dana. It trades about 0.04 of its potential returns per unit of risk. Dana Inc is currently generating about -0.02 per unit of risk. If you would invest 459.00 in BW Offshore Limited on August 30, 2024 and sell it today you would earn a total of 91.00 from holding BW Offshore Limited or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.37% |
| Values | Daily Returns |
BW Offshore Limited vs. Dana Inc
Performance |
| Timeline |
| BW Offshore Limited |
| Dana Inc |
BW Offshore and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Dana
The main advantage of trading using opposite BW Offshore and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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