Correlation Between BW Offshore and Terra Energy
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Terra Energy 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 Terra Energy 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 Terra Energy Corp, you can compare the effects of market volatilities on BW Offshore and Terra Energy 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 Terra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Terra Energy.
Diversification Opportunities for BW Offshore and Terra Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BWOFY and Terra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Terra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terra Energy Corp 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 Terra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terra Energy Corp has no effect on the direction of BW Offshore i.e., BW Offshore and Terra Energy go up and down completely randomly.
Pair Corralation between BW Offshore and Terra Energy
If you would invest 459.00 in BW Offshore Limited on September 21, 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 | Flat |
| Strength | Insignificant |
| Accuracy | 87.47% |
| Values | Daily Returns |
BW Offshore Limited vs. Terra Energy Corp
Performance |
| Timeline |
| BW Offshore Limited |
| Terra Energy Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BW Offshore and Terra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Terra Energy
The main advantage of trading using opposite BW Offshore and Terra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Terra Energy 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 Terra Energy will offset losses from the drop in Terra Energy's long position.| BW Offshore vs. Boston Properties | BW Offshore vs. Franklin Street Properties | BW Offshore vs. East Africa Metals | BW Offshore vs. Teradyne |
| Terra Energy vs. BW Offshore Limited | Terra Energy vs. Aerofoam Metals | Terra Energy vs. Uranium Energy Corp | Terra Energy vs. Cardinal Health |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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