Correlation Between BW Offshore and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness, you can compare the effects of market volatilities on BW Offshore and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Xponential Fitness.
Diversification Opportunities for BW Offshore and Xponential Fitness
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BWOFY and Xponential is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of BW Offshore i.e., BW Offshore and Xponential Fitness go up and down completely randomly.
Pair Corralation between BW Offshore and Xponential Fitness
Assuming the 90 days horizon BW Offshore is expected to generate 2.04 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, BW Offshore Limited is 2.96 times less risky than Xponential Fitness. It trades about 0.08 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Xponential Fitness on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Xponential Fitness or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore Limited vs. Xponential Fitness
Performance |
| Timeline |
| BW Offshore Limited |
| Xponential Fitness |
BW Offshore and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Xponential Fitness
The main advantage of trading using opposite BW Offshore and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Mattel Inc | Xponential Fitness vs. OneSpaWorld Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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