Correlation Between BW Offshore and Service Properties
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Service Properties 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 Service Properties 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 Service Properties Trust, you can compare the effects of market volatilities on BW Offshore and Service Properties 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 Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Service Properties.
Diversification Opportunities for BW Offshore and Service Properties
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWOFY and Service is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of BW Offshore i.e., BW Offshore and Service Properties go up and down completely randomly.
Pair Corralation between BW Offshore and Service Properties
Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.55 times more return on investment than Service Properties. However, BW Offshore Limited is 1.82 times less risky than Service Properties. It trades about 0.07 of its potential returns per unit of risk. Service Properties Trust is currently generating about -0.11 per unit of risk. If you would invest 428.00 in BW Offshore Limited on August 29, 2024 and sell it today you would earn a total of 110.00 from holding BW Offshore Limited or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. Service Properties Trust
Performance |
| Timeline |
| BW Offshore Limited |
| Service Properties Trust |
BW Offshore and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Service Properties
The main advantage of trading using opposite BW Offshore and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' long position.| BW Offshore vs. Legacy Education | BW Offshore vs. NVIDIA | BW Offshore vs. Apple Inc | BW Offshore vs. Microsoft |
| Service Properties vs. Old Republic International | Service Properties vs. SBM Offshore NV | Service Properties vs. BW Offshore Limited | Service Properties vs. MGIC Investment Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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