Correlation Between BW Offshore and Marine Products
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Marine Products 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 Marine Products 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 Marine Products, you can compare the effects of market volatilities on BW Offshore and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Marine Products.
Diversification Opportunities for BW Offshore and Marine Products
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWOFY and Marine is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of BW Offshore i.e., BW Offshore and Marine Products go up and down completely randomly.
Pair Corralation between BW Offshore and Marine Products
Assuming the 90 days horizon BW Offshore Limited is expected to generate 1.01 times more return on investment than Marine Products. However, BW Offshore is 1.01 times more volatile than Marine Products. It trades about 0.08 of its potential returns per unit of risk. Marine Products is currently generating about 0.01 per unit of risk. If you would invest 461.00 in BW Offshore Limited on September 1, 2024 and sell it today you would earn a total of 94.00 from holding BW Offshore Limited or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. Marine Products
Performance |
| Timeline |
| BW Offshore Limited |
| Marine Products |
BW Offshore and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Marine Products
The main advantage of trading using opposite BW Offshore and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Marine Products vs. LCI Industries | Marine Products vs. MCBC Holdings | Marine Products vs. Winnebago Industries | Marine Products vs. Thor Industries |
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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