Correlation Between BW Offshore and Mach Natural
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Mach Natural 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 Mach Natural 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 Mach Natural Resources, you can compare the effects of market volatilities on BW Offshore and Mach Natural 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 Mach Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Mach Natural.
Diversification Opportunities for BW Offshore and Mach Natural
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWOFY and Mach is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Mach Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach Natural Resources 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 Mach Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach Natural Resources has no effect on the direction of BW Offshore i.e., BW Offshore and Mach Natural go up and down completely randomly.
Pair Corralation between BW Offshore and Mach Natural
Assuming the 90 days horizon BW Offshore Limited is expected to generate 2.23 times more return on investment than Mach Natural. However, BW Offshore is 2.23 times more volatile than Mach Natural Resources. It trades about 0.1 of its potential returns per unit of risk. Mach Natural Resources is currently generating about -0.06 per unit of risk. If you would invest 473.00 in BW Offshore Limited on September 12, 2024 and sell it today you would earn a total of 82.00 from holding BW Offshore Limited or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
BW Offshore Limited vs. Mach Natural Resources
Performance |
| Timeline |
| BW Offshore Limited |
| Mach Natural Resources |
BW Offshore and Mach Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Mach Natural
The main advantage of trading using opposite BW Offshore and Mach Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Mach Natural 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 Mach Natural will offset losses from the drop in Mach Natural's long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Mach Natural vs. PACCAR Inc | Mach Natural vs. Solstad Offshore ASA | Mach Natural vs. Rivian Automotive | Mach Natural vs. Griffon |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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