Correlation Between BW Offshore and Loews Corp
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Loews Corp 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 Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on BW Offshore and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Loews Corp.
Diversification Opportunities for BW Offshore and Loews Corp
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BWOFY and Loews is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of BW Offshore i.e., BW Offshore and Loews Corp go up and down completely randomly.
Pair Corralation between BW Offshore and Loews Corp
Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the Loews Corp. In addition to that, BW Offshore is 1.48 times more volatile than Loews Corp. It trades about -0.11 of its total potential returns per unit of risk. Loews Corp is currently generating about 0.01 per unit of volatility. If you would invest 8,601 in Loews Corp on October 23, 2024 and sell it today you would earn a total of 24.00 from holding Loews Corp or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. Loews Corp
Performance |
| Timeline |
| BW Offshore Limited |
| Loews Corp |
BW Offshore and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Loews Corp
The main advantage of trading using opposite BW Offshore and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.| BW Offshore vs. FG Annuities Life | BW Offshore vs. Aterian | BW Offshore vs. Sun Country Airlines | BW Offshore vs. Cincinnati Financial |
| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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