Correlation Between BW Offshore and Delek Drilling
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Delek Drilling 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 Delek Drilling 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 Delek Drilling , you can compare the effects of market volatilities on BW Offshore and Delek Drilling 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 Delek Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Delek Drilling.
Diversification Opportunities for BW Offshore and Delek Drilling
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWOFY and Delek is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling 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 Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of BW Offshore i.e., BW Offshore and Delek Drilling go up and down completely randomly.
Pair Corralation between BW Offshore and Delek Drilling
Assuming the 90 days horizon BW Offshore is expected to generate 1.35 times less return on investment than Delek Drilling. But when comparing it to its historical volatility, BW Offshore Limited is 2.62 times less risky than Delek Drilling. It trades about 0.07 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Delek Drilling on September 12, 2024 and sell it today you would earn a total of 38.00 from holding Delek Drilling or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 55.27% |
| Values | Daily Returns |
BW Offshore Limited vs. Delek Drilling
Performance |
| Timeline |
| BW Offshore Limited |
| Delek Drilling |
BW Offshore and Delek Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Delek Drilling
The main advantage of trading using opposite BW Offshore and Delek Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Delek Drilling 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 Delek Drilling will offset losses from the drop in Delek Drilling's long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Delek Drilling vs. Permian Resources | Delek Drilling vs. Devon Energy | Delek Drilling vs. EOG Resources | Delek Drilling vs. Coterra Energy |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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