Correlation Between BW Offshore and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both BW Offshore and PennantPark Floating 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 PennantPark Floating 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 PennantPark Floating Rate, you can compare the effects of market volatilities on BW Offshore and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and PennantPark Floating.
Diversification Opportunities for BW Offshore and PennantPark Floating
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BWOFY and PennantPark is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of BW Offshore i.e., BW Offshore and PennantPark Floating go up and down completely randomly.
Pair Corralation between BW Offshore and PennantPark Floating
Assuming the 90 days horizon BW Offshore Limited is expected to generate 3.81 times more return on investment than PennantPark Floating. However, BW Offshore is 3.81 times more volatile than PennantPark Floating Rate. It trades about 0.11 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.01 per unit of risk. If you would invest 461.00 in BW Offshore Limited on August 31, 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 | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BW Offshore Limited vs. PennantPark Floating Rate
Performance |
Timeline |
BW Offshore Limited |
PennantPark Floating Rate |
BW Offshore and PennantPark Floating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BW Offshore and PennantPark Floating
The main advantage of trading using opposite BW Offshore and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.BW Offshore vs. Citizens | BW Offshore vs. Smith Douglas Homes | BW Offshore vs. Old Republic International | BW Offshore vs. Hudson Pacific Properties |
PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital | PennantPark Floating vs. Ares Capital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Share Portfolio Track or share privately all of your investments from the convenience of any device |