Correlation Between BW Offshore and Unum
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Unum 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 Unum 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 Unum Group, you can compare the effects of market volatilities on BW Offshore and Unum 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 Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Unum.
Diversification Opportunities for BW Offshore and Unum
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BWOFY and Unum is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of BW Offshore i.e., BW Offshore and Unum go up and down completely randomly.
Pair Corralation between BW Offshore and Unum
Assuming the 90 days horizon BW Offshore is expected to generate 2.9 times less return on investment than Unum. In addition to that, BW Offshore is 1.34 times more volatile than Unum Group. It trades about 0.04 of its total potential returns per unit of risk. Unum Group is currently generating about 0.17 per unit of volatility. If you would invest 4,600 in Unum Group on November 3, 2024 and sell it today you would earn a total of 3,025 from holding Unum Group or generate 65.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
BW Offshore Limited vs. Unum Group
Performance |
| Timeline |
| BW Offshore Limited |
| Unum Group |
BW Offshore and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Unum
The main advantage of trading using opposite BW Offshore and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.| BW Offshore vs. Allient | BW Offshore vs. Analog Devices | BW Offshore vs. Alvotech | BW Offshore vs. Western Digital |
| Unum vs. Prudential Financial | Unum vs. MetLife | Unum vs. Jackson Financial | Unum vs. Manulife Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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