Correlation Between BW Offshore and SEI Investments
Can any of the company-specific risk be diversified away by investing in both BW Offshore and SEI Investments 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 SEI Investments 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 SEI Investments, you can compare the effects of market volatilities on BW Offshore and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and SEI Investments.
Diversification Opportunities for BW Offshore and SEI Investments
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BWOFY and SEI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of BW Offshore i.e., BW Offshore and SEI Investments go up and down completely randomly.
Pair Corralation between BW Offshore and SEI Investments
Assuming the 90 days horizon BW Offshore is expected to generate 1.07 times less return on investment than SEI Investments. In addition to that, BW Offshore is 1.75 times more volatile than SEI Investments. It trades about 0.08 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.15 per unit of volatility. If you would invest 6,634 in SEI Investments on September 3, 2024 and sell it today you would earn a total of 1,629 from holding SEI Investments or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. SEI Investments
Performance |
| Timeline |
| BW Offshore Limited |
| SEI Investments |
BW Offshore and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and SEI Investments
The main advantage of trading using opposite BW Offshore and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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