Correlation Between Dana and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Dana and BW Offshore 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 Dana and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and BW Offshore Limited, you can compare the effects of market volatilities on Dana and BW Offshore 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 Dana with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and BW Offshore.
Diversification Opportunities for Dana and BW Offshore
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dana and BWOFY is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Dana 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 Dana Inc are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Dana i.e., Dana and BW Offshore go up and down completely randomly.
Pair Corralation between Dana and BW Offshore
Considering the 90-day investment horizon Dana Inc is expected to under-perform the BW Offshore. In addition to that, Dana is 1.49 times more volatile than BW Offshore Limited. It trades about -0.06 of its total potential returns per unit of risk. BW Offshore Limited is currently generating about 0.08 per unit of volatility. If you would invest 461.00 in BW Offshore Limited on September 1, 2024 and sell it today you would earn a total of 94.00 from holding BW Offshore Limited or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. BW Offshore Limited
Performance |
| Timeline |
| Dana Inc |
| BW Offshore Limited |
Dana and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and BW Offshore
The main advantage of trading using opposite Dana and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.The idea behind Dana Inc and BW Offshore Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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