Correlation Between BW Offshore and Origin Materials
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on BW Offshore and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Origin Materials.
Diversification Opportunities for BW Offshore and Origin Materials
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWOFY and Origin is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of BW Offshore i.e., BW Offshore and Origin Materials go up and down completely randomly.
Pair Corralation between BW Offshore and Origin Materials
Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.21 times more return on investment than Origin Materials. However, BW Offshore Limited is 4.7 times less risky than Origin Materials. It trades about 0.04 of its potential returns per unit of risk. Origin Materials is currently generating about 0.0 per unit of risk. If you would invest 459.00 in BW Offshore Limited on September 13, 2024 and sell it today you would earn a total of 96.00 from holding BW Offshore Limited or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.35% |
| Values | Daily Returns |
BW Offshore Limited vs. Origin Materials
Performance |
| Timeline |
| BW Offshore Limited |
| Origin Materials |
BW Offshore and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Origin Materials
The main advantage of trading using opposite BW Offshore and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |